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JAKARTA: Indonesian President-elect Prabowo Subianto will allow the country’s debt-to-GDP ratio to rise to 50% if his government can To increase taxesThe Financial Times quoted one of his closest advisers as saying.
In an interview with the Financial Times in London, Hashim Jojohadikusumo, Prabowo’s brother and adviser, said Indonesia could maintain its investment-grade rating even if its debt-to-GDP ratio rose to 50%.
“The idea is to increase revenue and raise debt levels,” Hashim said in the article.
“We don’t want to increase the debt level without increasing revenue,” Hashim said, referring to “taxes, sale taxmining rights royalties and import taxes”.
When contacted by Reuters on Thursday (July 11), Prabowo’s economic team in Jakarta declined to comment on the interview.
His team had previously denied media reports that Prabowo planned to increase the debt-to-GDP ratio from below 40% to 50%. They said at the time that the new president would continue to abide by existing fiscal rules.
Under these regulations, the government budget deficit cannot exceed 3% of GDP and the debt-to-GDP ratio cannot exceed 60%.
Concerns about Prabowo’s borrowing plans weighed on bond prices and the rupiah last month, sending the rupiah to a four-year low against the dollar.
During his campaign, Prabowo, who is due to take office in October, has said he wants to raise public debt levels while promising to increase taxes to 16 percent of GDP from around 10 percent currently.
Earlier this week, Time magazine reported that Prabowo had formed a team to study how to remove fiscal deficit and debt-to-GDP caps to finance his campaign promises. His fiscal affairs adviser told Reuters he was not aware of any discussions. Closing the fiscal gap and the debt ceiling.
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