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Slow tax revenue growth could increase govt debt, expert says
Government debt might continue to increase if the government fails to boost state revenue in the coming months.
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A customer counts US dollars at a money changer at the ITC Kuningan shopping center in South Jakarta. (Antara/Puspa Perwitasari)
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low tax revenue growth of 1.8 percent in the first quarter of this year, a major decline from the 9.9 percent growth posted in the same period in 2018, could result in an increase in government debt, an expert has said.
Government debt reached Rp 4.57 quadrillion (US$321.97 billion) as of March, a growth of 10.4 percent from the same period in 2018.
Securities firm Samuel Sekuritas Indonesia analyst Ahmad Mikail expressed concern about government debt increasing if the government fails to boost state revenue in the coming months.
“It is true that the government’s debt ratio is relatively low, namely about 30 percent to the gross domestic product (GDP). However, this does not include the debts of state-owned enterprises,” said Mikail on Sunday as reported by kontan.co.id.
The Finance Ministry revealed in a report that, as of March, government spending reached Rp 452.1 trillion or 18.37 percent of the entire year's targeted spending.
The full-year spending target as stated in the 2019 state budget is Rp 2.46 quadrillion, a growth of 7.7 percent from the target in 2018.
“The growth in spending was not in line with the growth in revenue. Like it or not, the government needs to add to its debts,” he added.
He said the increase in debt would also affect the country’s sovereign rating by both Moody’s and Standard & Poor‘s. “What I worry is that S&P and Moody’s will likely use state-owned enterprises’ debt to calculate the sovereign rating and it will add risk,” Mikail added. (bbn)
