Indonesia's Debt Research Articles

Analisis Hubungan Politik Utang Indonesia dan China Untuk Menghindari Debt Trap Diplomacy

The analysis of the political relationship of Indonesia's debt to China to avoid debt trap diplomacy discusses the political debt relationship between Indonesia and China, particularly considering the intensive cooperation and debt assistance that China has provided to Indonesia, as well as the establishment of loan condition regulations that threaten the use of the state budget as a payment tool. This writing aims to understand the development of Indonesia's debt to China, whether Indonesia is trapped in a Debt Trap, and how Indonesia can avoid Debt Trap Diplomacy. This research employs a qualitative descriptive analysis method, utilizing previously published sources with data collection sourced from books, journals, and other online media such as websites, databases, and information available on the internet. Based on dependency theory, it shows that loan conditions with high interest rates and strict repayment terms reflect unfavorable lending conditions. The increase in debt to China for the Indonesian economy can stimulate the country's growth, but a significant economic dependence can also make Indonesia more vulnerable to Debt Trap Diplomacy. The research results indicate that based on the analysis of Indonesia's debt to China, there has been a tendency for an increase over the past five years. Indonesia is also still in a position of safe debt ratios, both by national and global standards, and does not fall into the category of Debt Trap Diplomacy. Several steps, approaches, and diplomatic efforts have also been undertaken by Indonesia to avoid Debt Trap Diplomacy.

Not all investors are the same: Evidence from investor holdings of local-currency debt in Indonesia

Not all investors are the same: Evidence from investor holdings of local-currency debt in Indonesia

How does family business affect the association between corporate social responsibility disclosure and cost of debt in Indonesia?

AbstractThis study examines how corporate social responsibility (CSR) disclosure and family firms affect the cost of debt (COD) using a sample of companies listed on the Indonesia Stock Exchange between 2017 and 2020. Ordinary least square regression was applied to investigate this association. This study also addresses the endogeneity problem using the generalized method of moments (GMM). This study finds that CSR lowers a company's COD. Firms with more CSR reporting minimize information asymmetry and improve their reputation. Next, we investigate whether family ownership can moderate the relationship between CSR and the COD. These findings support the hypothesis that family ownership moderates the relationship between CSR and COD. It is possible that family businesses use CSR to maintain a good reputation among their stakeholders, thus producing more CSR reports. The findings contribute to the literature by providing empirical evidence on how CSR and family firms experience a lower COD capital in the emerging economy context of Indonesia. Furthermore, this study provides academic implications by investigating whether family ownership can be a moderator variable in the association between CSR and COD. The study also has practical implications for practitioners and regulators in creating policies that promote better CSR initiatives and corporate governance systems.

Pengaruh Produk Domestik Bruto Pengeluaran Pemerintah dan Tingkat Kurs terhadap Utang Luar Negeri di Indonesia

The increase in foreign debt in Indonesia occurs almost every year. This is of course a burden on the government itself. This study aims to analyze how much influence gross domestic product, government spending and exchange rates have on Indonesia's foreign debt. The data used in this study is secondary data in the form of time series data from 2018 to 2022. The analytical method used is the classical assumption test and hypothesis testing. The classic assumption test includes the data normality test, multicollinearity test, heteroscedasticity test and autocorrelation test. While testing the hypothesis includes the t test and f test. The results of this analysis indicate that government spending has a positive, partial and simultaneous effect on Indonesia's foreign debt. GDP and Exchange Rate have a positive effect, not partially and simultaneously have an effect on Indonesia's Foreign Debt.

How do Environmental Quality and Technology Affect Public Debt in Indonesia? A Time Series Analysis

In recent years, Indonesia has grappled with a notable surge in public debt, underscoring the urgency of prudent fiscal management. This study employs the Autoregressive Distributed Lag (ARDL) method to investigate the long-term connections between key variables, including gross domestic product, gross domestic investment, gross domestic savings, carbon emissions, and technology, using data from 1990 to 2020. Our findings reveal a significant and negative association between savings and environmental degradation with Indonesia's public debt. These insights bear substantial policy implications, emphasizing the importance of integrating environmental considerations into economic planning and suggesting that the banking sector could enhance fiscal stability by incentivizing increased savings rates. This study provides valuable guidance for policymakers and economists seeking to foster Indonesia's economic resilience in the face of mounting public debt.

Pengaruh Pendapatan Domestik Bruto, Nilai Kurs, Dan Penanaman Modal Asing Terhadap Utang Luar Negeri Indonesia Periode 1990-2022

The purpose of this study was to analyze the effect of Gross Domestic Income, Exchange Rate, and Foreign Investment on foreign debt in Indonesia for the period 1990-2022. This study uses quantitative data. This study uses multiple linear regression statistical tests with the Ordinary Least Square (OLS) approach. From the results of the determination test, it can be seen that the R-squared value of 0.914054 indicates that the X1, X2 and X3 variables (GDP, KURS and FDI) simultaneously influence the Foreign Debt (Y) variable by 91.40%, and the remaining 8.60% is influenced by other variables not included in this study.

DETERMINASI UTANG LUAR NEGERI DI INDONESIA (PERIODE TAHUN 1990-2021)

The country in developing its economy cannot be separated from debt, especially debt originating from abroad. This causes countries to depend on foreign debt from other countries, namely developed countries. This study aims to explain the determinants of foreign debt in Indonesia. The research method used is the Ordinary Least Square (OLS) method using annual time series data for 32 years from 1990-2021 and analyzed with the help of Eviews 10. Secondary data was obtained from the World Bank and Bank Indonesia (BI). The results of the study reveal that the Gross Domestic Product (GDP) has a positive and significant effect on Foreign Debt (ULN), Foreign Investment (PMA), and the exchange rate (KURS) has a negative and significant effect on Foreign Debt (ULN), as well as exports (EKS) has a negative and insignificant effect on Foreign Debt (ULN). Simultaneously, the variables PDB, FDI, EKS, and KURS have a positive and significant effect on Foreign Debt (ULN)

Analisis Keberlanjutan serta Pengaruh Surat Berharga Negara dan Faktor Lainnya terhadap Pertumbuhan Ekonomi di Indonesia

Government Securities (SBN) is one of the instruments that dominates in financing the deficit in the State Revenue and Expenditure Budget (APBN) in Indonesia. This is in line with the government's efforts to continuously improve financial independence. The purpose of this study is to analyze the effect of SBN and other factors on economic growth through government spending, and the condition of debt sustainability in Indonesia using data for the period 2004-2019. The analytical method used in this study uses a simultaneous equation model. The increase in SBN has a significant positive effect in increasing the types of capital expenditures and TKDD expenditures. SBN did not increase subsidies and personnel spending. Capital spending has a significant effect on economic growth with the highest elasticity among other significant government spending. Indonesia's debt condition tends to show a sustainable debt condition, because an increase in SBN is followed by an increase in the primary balance, through productive capital expenditures, thereby increasing growth and state revenues.

Foreign Consortium Institution and the Economic Dependency of Indonesia during the New Order: From IGGI to CGI

The main purpose of this article is to analyze the economic dependency of Indonesia on sources of foreign loan funds. The problems were analyzed through the historical method based on the primary sources such as annual report from World Bank and the Indonesian Ministry of Finance. IGGI and CGI claimed to be able to support Indonesia to break away from the shackles of financial problems. Both institutions rescheduled the debt of Indonesia to the creditor countries and opened networking access of international donor from the government, private, or international donor institutions such as World Bank and IMF in two mechanisms long-term and short-term. Short term was provided to Indonesia to give space in funding import commodity, while the long-term was used to fund investment and infrastructure program. The high level of dependency made Indonesia's debt difficult to break away and the amount piled up. Indonesia's economic policy in the New Order was considered as a disaster that had an enormous effect until today.

Economic Policy Uncertainty and Cost of Debt Financing in Indonesia

This study aims to see the effect of Economic Policy Uncertainty (EPU) to the cost of debt in Indonesia. This quantitative research sample used in this study includes a total of 4,312 observations collected from 453 listed firms on IDX from the period 2006 to 2020. Using fixed-effect panel data regression, our result shows that there is a positive relationship between the cost of debt and EPU, and the effect is even greater when a crisis occurs. With additional analysis conducted, our result show EPU has stronger impact on large firms’ than small firms’ cost of debt. However, when a crisis occurs, EPU has a higher effect on small firms samples than on large firms samples. Thus, it can be concluded if the crisis plays an important role in the research results.
 Keywords: Cost Of Debt; Economic Policy Uncertainty; Crisis.

The nexus between foreign exchange and external debt in Indonesia: evidence from linear and nonlinear ARDL approaches

We examine the long- and short-term effects of foreign exchange on Indonesia's external debts. Employing an autoregressive distributed lag (ARDL) bounds testing on quarterly data from 2010 to 2019 and testing for effect asymmetry, we found a long-run cointegrating relationship between the two variables. We also found a slow adjustment to an equilibrium state following a shock. Foreign exchange demonstrates a positive long-run effect on Indonesia's external debt, while in the short-run the effect is negative. Furthermore, we found an asymmetry in the elasticities of external debt with respect to rupiah-to-US dollar exchange rate fluctuations. The positive effect of Indonesian rupiah volatility on Indonesian external debt would be more severe when the rupiah appreciates against the dollar compared to a situation of rupiah depreciation. Therefore, although a depreciation of rupiah against the US dollar under a floating foreign exchange regime adopted by Indonesia since 1997 would in the long-run increase external debt, the impact is moderate. Any short-run movement of Indonesia's external debt following a shock would be pulled back to its long-run equilibrium path. We recommend that Indonesia should maintain a floating exchange regime and allow rupiah to depreciate at a moderate rate in the long-run.

Causality Relationship between Economic Growth, Export, and Foreign Debt in Indonesia

Causality Relationship between Economic Growth, Export, and Foreign Debt in Indonesia

Fiscal Sustainability in Indonesia with Asymmetry

The management of fiscal balance determines public debt sustainability, where a positive response of primary balance towards the debt ratio indicates a sustainable path. However, there might be asymmetry in the government’s fiscal management between different phases of the debt trajectory and business cycle. This study examines the sustainability of fiscal imbalance and public debt in Indonesia using the fiscal reaction function with annual fiscal data from 1976 to 2019. We incorporate asymmetry by decomposing the lagged debt ratio and cyclical output variables into their positive and negative partial sums. We find that Indonesia’s fiscal imbalance is on a path of weak sustainability as revenue grows more slowly than expenditure in the long run, with the bi-directional Granger causality between the two indicating fiscal synchronization. Long-run public debt sustainability is on a more sustainable path as primary surplus responds positively to the debt ratio. However, our asymmetric analysis suggests that this might be a false impression as primary balance decreases only in response to debt ratio decrease but increases less or fails to increase when the debt ratio rises, which is potentially dangerous.

CAUSALITY BETWEEN GROSS DOMESTIC PRODUCT, EXPORTS, IMPORTS, FOREIGN EXCHANGE RESERVES, AND FOREIGN DEBT IN INDONESIA

This research aims to determine the relationship between gross domestic product, exports, imports, foreign exchange reserves, and foreign debt in Indonesia from 1978 – 2018. As a developed country, Indonesia must know the interrelatedness between the GDP and the variable in the international balance of payment to move the economy well. This research using the Vector Autoregression (VAR) method that includes ADF Test, Granger Causality, Johanssen Co-integration, Vector Error Correction Model (VECM), and forecasting with Impulse Response Function (IRF) and Variance Decomposition (VD). From the Granger causality test results that have been carried out among the five variables, it is concluded that there is no causality relationship, but there are six one-way relationships. Simultaneously, the cointegration test from the Johanssen Co-Integration test results in the five variables tested. Forecasting for the next ten years through the IRF and VD tests shows that GDP positively responds to foreign debt and exports. Exports provide a positive response to GDP and imports. Imports give a positive response to exports, GDP, and foreign exchange reserves. At the same time, foreign debt gives a positive reaction to GDP and imports. Then foreign exchange reserves provide a positive response to exports and foreign debt. The government needs to allocate funds from foreign debt to the export sectors to increase GDP. Keywords: Causality, VECM, Gross Domestic Product, Exports, Foreign Debt Java IndustryJEL Classification: F14, F41, C01

POLICY OF CHINA'S DEBT-TRAP DIPLOMACY: The Influence Of Media In Forming Community Political Opinions

The term debt-trap or Chinese debt trap originated from the introduction of the Belt and Road Initiative (BRI) policy by Chinese President Xi Jinping in 2013 which aims to connect the Eurasian economy with infrastructure, trade, and investment. Debt trap diplomacy is related to the cases that occurred in Sri Lanka and Pakistan. In Indonesia, the policy on cooperation projects in the infrastructure sector existed before the BRI policy was signed and then increasingly under the BRI banner. However, if seen from the SULNI June 2020 data, the value of Indonesia's debt to China is around 1% and the cooperation is mostly in the field of productive infrastructure. If the policy of Indonesia-China cooperation is carried out properly and continues to be introspective both inside and outside, then development funding under the BRI banner can produce good results and can avoid debt bondage. In Indonesia, where most of the people have negative sentiments towards Chinese policies, this often happens and is framed for political consumption which is disposed of to the public through mass media and then used to lead opinions through discussions on social media.

The Resilience of Indonesia’s State Budget against Central Government Debt

The growth of central government debt in Indonesia is the subject of endless discussion for both economists and experts in other fields. Although the government uses this debt in order to increase Indonesia's competence through infrastructure development, there are problems in the form of previous accumulated debts. This accumulative debt is known as the concept of “debt stock” which is assessed through Indonesia's fiscal resilience (APBN) to measure the repayment capacity of new debts that will be made in the future. This ability will be seen using long-term data from 1990 to 2016 which is reflected in the variables of central government debt, government spending and revenue so that it is known that Indonesia's central government debt can still be said to be sustainable and the Indonesian government should prioritize productive expenditures in order to increase government revenues.

Economic Environment Effect: Foreign Investment Variables, Exports and Dollar Exchange Rates

The increase of foreign debt can be affected by inter-state trade in which there are foreign investment, exports, and imports. The value of foreign investment, exports, and imports of a country is affected by the dollar exchange rate. This study aims to test empirically the influence of foreign investment, exports and imports of foreign debt with the dollar exchange rate as an intervening variable. The data used in this study are secondary data which is available at Bank of Indonesia (BI), The Ministry of Finance, UNCTAD FDI / TNC database and BPS data from 1986 to 2017. The data analysis technique used is path analysis. Based on the results of the analysis, foreign investment variables, exports and dollar exchange rates do not directly affect foreign debt, but imports directly affect foreign debt. Dollar exchange rate as an intervening variable for export and import variables has an indirect influence on foreign debt in Indonesia in from 1986 to 2017, while foreign investment variable on foreign debt of dollar rate does not become an intervening variable.

PENGARUH NILAI TUKAR RUPIAH, INFLASI DAN PERTUMBUHAN EKONOMI TERHADAP UTANG LUAR NEGERI INDONESIA TAHUN 2000-2017

The purpose of this study was to analyze how the effect of exchange rate of rupiah, inflation and Economic Growth on Foreign debt in Indonesia in 2000-2017.The instrument Analysis used multiple linear regression method with OLS (ordinary least squares) method by using time series data. The method test using the classical assumption test and statistical test.From the analysis results obtained that the effect of exchange rate of rupiah is has positively effect and inflation have a negative effect while Economic Growth have a negative effect. Simultaneously of all these variables have a significant effect on Foreign debt in Indonesia. The conclusion of this reserch explains that all of variables, exchange rate of rupiah and Economic Growth variables have a significant postive effect on Foreign debt, and the variable that negatively effect on Foreign debt in Indonesia is inflation variable.

Pengaruh Net Ekspor dan Kebijakan Fiskal Terhadap Kebijakan Hutang Pemerintah di Indonesia

This research aims to determine (1) the effect of net export on government debt in Indonesia, (2) the effect of fiscal policy on government debt in Indonesia, (3) the effect of net export and fiscal policy on government debt in Indonesia. The method used in this study is multiple linear regression. The research type is descriptive research while the data used is time series data from 1987-2016 obtained from documentation of Bank Indonesia, and BPS Indonesia. The results of this study indicate that (1) net export has a significant positive effect on government debt in Indonesia (2) fiscal policy has a significant positive effect on government debt in Indonesia (3) net export and fiscal policy has a significant positif effect on government debt in Indonesia. Based on this research is expected to provide information about government debt as well as the factors that influence, and so the government and society can monitor and increase efforts to reduce government debt.

The Effect of Foreign Debt on The Exchange Rate and Its Impact on Monetary Policy in Indonesia

The objectives of this study are to analyze the effect of foreign debt on the exchange rate that seen from the foreign debt and the exchange rate, and add the variable of inflationary monetary policy and the interest rate of BI Rate to test its impact on monetary policy in Indonesia. The approach in this study is quantitative approach. Data that used are Time Series data from Asian Development Bank and Indonesian World Bank in 1986-2013. Variables that used are exchange rate, foreign debt, inflation and the interest rate of BI Rate. Method that used in this study is Vector Auto Regression (VAR) analysis. The stages that used in this study testing are stationary test, optimal lag test, Granger causality test, impulse response test, and variance decomposite test in Eviews 6 program. The results of Granger causality test of all variables in this study are unlikely to have a relationship and there are only two variables that give an effect.Based on the results of Granger causality, it shows that there is bidirectional between foreign debt variable that has an effect on the exchange rate in Indonesia and the exchange rate has an effect on the foreign debt in Indonesia. While the foreign debt has an effect on the interest rate of BI Rate. For the results of impulse response test show that the exchange rate variable gives the biggest respond to the shock of foreign debt variable, compared to inflation and the interest rate of BI Rate variables. The results of Variance decomposite show that the contribution which given by foreign debt variable on the exchange rate is relatively bigger compared to the contribution that given by inflation and the interest rate of BI Rate variables.