VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

Illustration - Deferring debt repayment, promoting tax compliance, ending tax incentives, clamping down on corruption, and tightening bureaucratic spending are some ways the government can cut its debt burden, an economist has said. (ANTARA/REUTERS/Rick Wilking/pri) - 

Center of Economic and Law Studies (Celios) director Bhima Yudhistira has proposed five measures to mitigate and control rising government debt.

"To prevent debt from increasing further (the government) should first hold negotiations on the debt (and) soon,” he said here on Saturday.

The negotiations may lead to deferred debt repayments, particularly due to the COVID-19 pandemic, he added.

If Indonesia has a heavy debt burden with annual interest amounting to 373 trillion Indonesian rupiahs, it can request creditors to defer interest payment until 2022 or 2023 due to the pandemic, he suggested.

Second, the government must raise the tax ratio by promoting tax compliance, among other things, Yudhistira said.

Third, the government must stop providing tax incentives, particularly to sectors that have received a stimulus though it has not been effective, he advised.

Fourth, the government must move to restrict corrupt attitudes to ensure taxation rules are upheld because corruption can hurt tax receipts, he said.

“This (corruption) also harms tax receipts, which will eventually add to the burden between the addition of debt and the obligation of debt repayment," he explained.

And finally, the government can tighten bureaucratic spending, including personnel and capital spending, Yudhistira advised.

"Non-essential spending such as official travel can be slashed because fiscal room must be kept in such a way as to allow more urgent spending," he pointed out//ANT