GOVERNMENT DEBT MANAGEMENT RISK MITIGATION STRATEGY IN MAINTAINING FISCAL SUSTAINABILITY IN THE ERA OF NATIONAL ECONOMIC RECOVERY

Abstract

Abstract— The Covid-19 pandemic has caused drastic changes in the economic life of almost all nations worldwide. Indonesia responded to the pandemic with various policies, including adjustments in fiscal policy. The sharp increase in the APBN deficit due to the economic slowdown and the Government's efforts to overcome the pandemic has created various risks in debt management.

Through this research, the authors examine the financing risk portfolio during the economic recovery period, efforts to mitigate the Government's debt risk during the economic recovery period, and formulate alternative strategies related to financing risk management during the national economic recovery period. The study used descriptive qualitative analysis.

The study results show that the increased financing needs during the Covid-19 pandemic for 2020-2021 have led to several debt risks. These risks include interest rate, exchange rate risk, lack of financing, and refinancing risk.

Issuing domestic debt, especially the issuance of SBN, can be one of the efforts to mitigate debt interest rates and the fluctuating Rupiah exchange rate. To mitigate the risk of financing shortages, the Government is continuing the burden-sharing program with Bank Indonesia. Refinancing risk mitigation can be done with a policy regulating the maturity structure of Government debt so that it does not accumulate in specific years.

To reduce financing pressure in the future, three strategies are offered, namely fiscal reform to improve the quality of the APBN so that it can become a driver of economic growth, development of non-debt financing sources, for example, PPP, SWF, and SMV, and deepening of the domestic financial market