Spraying disinfectant to prevent the spread of COVID-19 in Jakarta (Photo: AFP/VNA)
Jakarta (VNA) - The World Bank (WB)has called on the Indonesian government to formulate a sound fiscal strategy to“flatten the debt curve” and maintain financial market confidence as debtmounts amid the COVID-19 pandemic.
Indonesia’s debt-to-gross domestic product (GDP) ratio would rise to 37 percent this year from 29.8 percent last year, drivenby an increase in borrowings to cover for the widening budget deficit and tocope with the economic slowdown and rupiah exchange rate depreciation, accordingto WB senior economist for Indonesia Ralph van Doorn.
The Indonesian government should provide assurancesover its fiscal strategy to raise revenues back to at least the 2018 level toflatten the debt curve, he said, adding the country risked losing marketconfidence over its mounting debts.
He also suggested Indonesia show a crediblepath for the economy to unwind exceptional measures taken by the government tobattle the pandemic.
Indonesia’s budget deficit is expected to increaseto 6.27 percent of its GDP this year, more than double theinitial ceiling of 3 percent,
The WB has projected zero percent growth for the Indonesian economy under the baselinescenario. However, the economy may contract 3.5 percent under the worst-casescenario./.
