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

Author

Listed:
  • Robert A. Simanjuntak

    (Faculty of Economics University of Indonesia, Indonesia)

  • Friska P. Panjaitan

    (PhD Candidate, Hitotsubashi University, Japan)

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.

Suggested Citation

  • Robert A. Simanjuntak & Friska P. Panjaitan, 2007. "Government Debt and Fiscal Sustainability: A Case Study of Indonesia 1988-2001," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 55, pages 219-251, December.
    • Handle: RePEc:lpe:efijnl:200712
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    More about this item

    Keywords

    Fiscal Sustainability; Government Debt; Branson Model; Present Value Constraint; Indonesia;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F35 - International Economics - - International Finance - - - Foreign Aid

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