As President Joko Widodo’s term nears its end, the nation stands at a critical juncture, burdened by an unprecedented surge in debt. Jokowi’s aggressive borrowing strategy has left a staggering financial legacy that will shape the trajectory of the incoming administration. With Prabowo Subianto and Gibran Rakabuming Raka poised to assume leadership, the weight of this debt becomes a pressing challenge. The planned new borrowing of IDR 775.9 trillion for 2025 underscores the profound impact of Jokowi’s fiscal policies and sets the stage for a complex economic landscape. This prologue sets the scene for an in-depth exploration of how this debt legacy will test the resilience and strategies of Prabowo’s government, as they navigate the financial storm inherited from their predecessors.
The debt policy of President Joko Widodo (Jokowi) has left a heavy burden on the nation. With a significant surge in debt during his tenure, the incoming administration, likely led by Prabowo Subianto and Gibran Rakabuming Raka, will inherit a substantial financial load. The planned new debt of IDR 775.9 trillion for Prabowo’s first year in office, according to the 2025 RAPBN (State Budget) financial note, reflects the direct impact of Jokowi’s reckless debt policies. This article critically examines how this debt legacy burdens the new government and analyzes its implications.
Jokowi’s Debt Legacy
Aggressive debt policies characterize Jokowi’s administration. During his term, national debt surged dramatically, reaching IDR 8,500 trillion by mid-2024. This increase was driven by rising financing needs for major infrastructure projects and development programs, often lacking adequate management plans.
The implications of Jokowi’s debt policy are serious:
1. Increased Debt Burden: As debt rises, so does the interest burden, limiting the government’s fiscal space to allocate funds to other critical sectors such as education and healthcare.
2. Dependence on External Financing: The surge in debt creates reliance on external financing and exposes the economy to currency risks and global interest rate fluctuations.
3. Lack of Transparent Debt Management: The use of debt under Jokowi’s administration was often opaque, lacking comprehensive assessments of long-term economic impacts.
Implications for Prabowo’s Government
The new Prabowo administration will face significant challenges in managing the inherited debt. The plan to borrow IDR 775.9 trillion in 2025 highlights the urgent need to cover the budget deficit and continue government programs. However, several issues need to be addressed:
- Increased Debt Load: The 40 percent increase in new borrowing from the previous year will escalate the debt burden. This could put additional pressure on the national budget and limit the government’s ability to invest in productive sectors.
Budget Balance and Deficit: With the budget deficit projected at IDR 616.2 trillion, or 2.53 percent of GDP, Prabowo’s government faces a substantial challenge in maintaining fiscal balance while managing debt. A high deficit could lead to additional borrowing, potentially worsening the situation.
Effective Debt Management: Prabowo’s administration must ensure that debt management is carried out efficiently and strategically. This includes carefully assessing debt use for projects that offer long-term benefits and ensuring that the debt burden does not hinder economic growth.
Transparency and Accountability: Debt management must be conducted with high transparency and accountability to avoid the problems faced by the previous administration. Effective impact assessment and management will be crucial to prevent potential debt crises in the future.
Conclusion
The debt legacy from Jokowi’s administration poses a heavy burden for Prabowo’s government. With a significant debt increase, Prabowo and Gibran’s primary challenge will be to manage the debt wisely while ensuring fiscal balance and economic growth. The new administration must adopt transparent, efficient, and sustainable debt management strategies to avoid potential debt crises and ensure long-term economic stability. Success in this area will be a key test for the new leadership in addressing the accumulating debt legacy from the previous administration.
