Impact of National Debt Burden on Indonesia's Economic Stability

Abstract

This research asserts that national debt becomes burdensome when there is an increase in debt overhang, a lack of foreign reserves to pay for short-term external debt and a lack of revenue from the government to pay for debt service. The purpose of this study is to investigate the connection between Indonesia's economic stability and national burden debt. Data collected from 2000 to 2022, sourced from the World Development Indicators and the Statistical Bulletin of the Central Bank of Indonesia (2022 edition), were utilized. The factors used to quantify the obligation trouble are the all out obligation to-Gross domestic product proportion (obligation overhang), the momentary outer obligation to-saves proportion (hold sufficiency), and the obligation administration cost-to-government income proportion (income ampleness). The exchange rate is considered a control variable. The real growth rate of GDP is used to evaluate economic stability. The analysis is carried out using the Autoregressive Distributed Lag (ARDL) model, which takes into account first differences and the stationary nature of the variables at both levels. The ARDL estimation demonstrates that revenue sufficiency has a significant and negative impact on economic stability over time, with the overall effect of the explanatory variables decreasing over time.