Indonesia's debt ratio, however, remained safe at 28.7 percent of the country's gross domestic product (GDP) in 2017. This low level of debt is the result of structural prudent fiscal policies of the Indonesian government. After the traumatic Asian Financial Crisis, Indonesian policymakers implemented two key laws that prevent Indonesian debt to rise to alarming levels: (1) the government's budget deficit in the state budget is not allowed to exceed 3 percent of GDP, and (2) the country's debt-to-GDP ratio is not allowed to exceed 60 percent.

Despite the safe level of Indonesian debt, Vitor Gaspar, Director of the IMF's Fiscal Affairs Department, there is room for improvement, especially on the revenue-side. Gaspar said there is plenty of room for Indonesia to strengthen its tax to-GDP ratio. Currently, Indonesia's tax ratio stands at a weak 10 percent only. Thus, the recently completed tax amnesty program should not be the end but just the beginning of Indonesia's tax reforms.

When commenting on Indonesia's rising debt-to-GDP ratio in recent years, Indonesian Finance Minister Sri Mulyani Indrawati said the increase makes sense because the government's annual budget shows a deficit each year. Therefore, the nation's debt ratio is bound to rise accordingly. However, she emphasized that Indonesia's debt ratio is at a safe level. Indrawati added that a deepening of financial markets would be important from a fiscal point of view.

Debt-to-GDP Comparison in 2017:

Country Debt Ratio
Japan      253
Singapore      111
USA      105
United Kingdom       85
India       69
Vietnam       62
Netherlands       57
Malaysia       51
China       48
Australia       42
Thailand       42
Philippines       42
Hong Kong       38
South Korea       38
Indonesia       29
Turkey       28

Source: Bisnis Indonesia