THE SUSTAINABILITY OF STATE BUDGET IN DEBT REPAYMENT

Authors

Haryo Kuncoro, Jakarta State of University, IndonesiaFollow

Document Type

Article

Abstract

This paper is designed to analyze the sustainability of the central government budget in the case of Indonesia over the period of 1999-2009. First, we explore the theoretical background of the fiscal sustainability. Second, we develop a model to capture some factors determining the fiscal sustainability. Unlike the previous studies, we use both domestic debt and foreign debt to assess the fiscal solvency. Finally, we estimate it empirically. Based on the quarterly data analysis, we concluded that the government budget is unsustainable. This is associated with domestic debt rather than foreign debt. They imply that the central government should manage the debts carefully including re-profile, re-schedule, and re-structure them in order to spread the excess burden in the future. Also, the fiscal risks should be calculated comprehensively in order to maintain solvency.

Recommended Citation

Kuncoro, Haryo (2011) "THE SUSTAINABILITY OF STATE BUDGET IN DEBT REPAYMENT," Bulletin of Monetary Economics and Banking: Vol. 13: No. 4, Article 2.
DOI: https://doi.org/10.21098/bemp.v13i4.400
Available at: https://bulletin.bmeb-bi.org/bmeb/vol13/iss4/2

First Page

415

Last Page

434

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

Jakarta State of University