Government Debt and Fiscal Sustainability: A Case Study of Indonesia 1988-2001

Robert A. Simanjuntak and Friska P. Panjaitan
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Robert A. Simanjuntak: Faculty of Economics University of Indonesia, Indonesia
Friska P. Panjaitan: PhD Candidate, Hitotsubashi University, Japan

Economics and Finance in Indonesia, 2007, vol. 55, 219-251

Abstract: This paper examines the dynamics of the Indonesian government’s debt during the period of 1988-2001, its estimation and the impact on the government budget until 2007, by using the Branson model and the Present Value Constraint for the budget.Based on the evaluation, it can be concluded that after the crisis in 1997-1998, public debt movements tended to be explosive and, consequently, caused the budget condition to be relatively unsustainable. The discussion also concludes that at least for the medium-term, there should be a serious effort to reduce the budget deficit to achieve a sustainable fiscal condition. Even though the analysis covers only the period up to 2007, some lessons to be learned and strategic steps for the future are presented, both for the revenues and expenditures side.

Keywords: Fiscal Sustainability; Government Debt; Branson Model; Present Value Constraint; Indonesia (search for similar items in EconPapers)
JEL-codes: C61 E60 F31 F35 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:200712

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