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Government Needs to Use Debt To Fund Industrialization
Rabu, 24 Januari 2018 | 12:35 WIB
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Skalanews - The government needs to use financing sourced from debt for infrastructure development and encourage industrialization and not for unproductive spending, said Mulyanto, Chairman of The Center for Strategic Development Studies (CSDS).

"The debt used to build infrastructure is expected to increase industrial growth rate. The facts today still show the opposite, there is deindustrialization," Mulyanto said through a written statement in Jakarta on Monday (22/1), regarding the monthly review of CSDS.

Mulyanto criticized the industry's contribution to economic growth which, he said, would drop to 19 percent by 2017 from 28 percent in 2012.

"These government debt projections and allocations must be more precise and qualified in sectors that are truly productive. Massive infrastructure development needs to be carefully evaluated," he said.

Meanwhile, according to economist of Faculty of Economics and Business UI Fitra Faisal, discourse about debt need to be viewed from a more comprehensive perspective. Especially in 2018, which in fact the political year, the discussion of debt is often a political commodity.

"Often the discussion leads to political logic, especially in the political years as it is today. Because basically politics and economy can not be separated and are interchangeable," he said.

Faisal stressed the main priority is the use of debt should be addressed to the welfare programs of the people.

He cited Thailand as one of the countries in Southeast Asia, able to grow its economy up to six percent and has better infrastructure compared to Indonesia. Though the amount of debt is less.

This is because of differences in fiscal policy of both countries.

"Projection and a good debt allocation in development will have a good impact on economic performance.To grow, we need debt, but development projections are so important that our debt is targeted, qualified and productive," he said.

Another CSDS economist Yusuf Wibisono considers the government to pay attention to the continuing negative primary balance. When the primary equilibrium is negative, as it is now, it means that to pay interest on the debt only, the government can not afford it and have to borrow again.

Yusuf estimates that government debt will increase by Rp500 trillion annually. (antara/Frida Astuti)