Analysis of the Long-Term Impact of Public Debt Policy on Macroeconomic Stability in Indonesia

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Published: Mar 24, 2025
DOI: https://doi.org/10.55299/ijec.v4i1.1292
Keywords:
Public Debt, Macroeconomic Stability, Fiscal Policy, Economic Growth, Econometric Model

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Edwin Agus Buniarto
Management Department (Finance), Study Program Management, Faculty of Economics, Islamic Kadiri University
https://orcid.org/0000-0001-7086-6932
Mohbir Umasugi
Department of Public Administration, Faculty of Social and Political Sciences, Public Administration Study Program, Terbuka University
Atiqatul Musyarofah
3Department of Islamic Religious Education, Faculty of Tarbiyah, Islamic Ibrahimy Genteng Banyuwangi Institute
Johan Setiawan
Department of Agribusiness, Faculty of Agriculture, Sultan Ageng Tirtayasa University
Hartoto Hartoto
Islamic Economics Study Program, Faculty of Islamic Economics and Business, Miftahul Ulum Islamic Institute, Tanjungpinang

Abstract

Public debt policy plays an important role in the Indonesian economy, especially in supporting development financing and maintaining fiscal stability. This study analyzes the long-term impact of public debt on macroeconomic stability, considering indicators such as economic growth, inflation, fiscal balance, exchange rate, and interest rate. This study uses secondary data from Bank Indonesia (BI), Ministry of Finance (MoF), Central Bureau of Statistics (BPS), International Monetary Fund (IMF), and the Indonesian Central Bureau of Statistics (IBPS). Fund (IMF), and the World Bank to identify the relationship between debt policy and national economic stability. The results of the analysis show that although public debt can drive economic growth if used for productive investments such as infrastructure, education, and other strategic sectors, an increase in debt that is not managed properly risks causing fiscal imbalance, inflation, and dependence on foreign financing. The econometric model used in this study shows that Indonesia's economic growth tends to decline when the debt-to-GDP ratio increases significantly. In addition, fluctuations in the rupiah exchange rate and international interest rates also affect the amount of foreign debt payments. This study recommends a more transparent debt management policy that is oriented towards productive investment, diversification of financing sources to reduce exchange rate risk, and fiscal reform to increase state revenues and reduce dependence on debt. With the right strategy, public debt can function as an instrument of sustainable development without sacrificing long-term economic stability.

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How to Cite
Buniarto, E. A., Umasugi, M., Musyarofah, A., Setiawan, J., & Hartoto, H. (2025). Analysis of the Long-Term Impact of Public Debt Policy on Macroeconomic Stability in Indonesia. International Journal of Economics (IJEC), 4(1), 353–368. https://doi.org/10.55299/ijec.v4i1.1292
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Vol. 4 No. 1 (2025): January-June
Section
Articles
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This work is licensed under a Creative Commons Attribution 4.0 International License.

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