THE SUSTAINABILITY OF STATE BUDGET IN DEBT REPAYMENT | Zendy

Haryo Kuncoro | Zendy

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THE SUSTAINABILITY OF STATE BUDGET IN DEBT REPAYMENT

Author(s) -

Haryo Kuncoro

Publication year - 2011

Publication title -

deleted journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.505

H-Index - 4

ISSN - 2460-9196

DOI - 10.21098/bemp.v13i4.400

Subject(s) - solvency , fiscal sustainability , debt , sustainability , internal debt , external debt , debt to gdp ratio , fiscal policy , government debt , economics , government (linguistics) , order (exchange) , macroeconomics , monetary economics , business , financial system , finance , ecology , linguistics , philosophy , biology , market liquidity

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. Keywords : Domestic debt, Foreign debt, Fiscal sustainability, Primary balance JEL Clasbsification: E62, H63

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