Limits to government debt sustainability in middle-income countries

Abstract

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 │ ECO/WKP(2018)41 LIMITS TO GOVERNMENT DEBT SUSTAINABILITY IN MIDDLE-INCOME COUNTRIES Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

Fiscal Sustainability in Indonesia with Asymmetry

“…Since the debt ratio worsened during the Asian Financial Crisis, Indonesia has instituted various reforms to improve fiscal management, including the 2003 State Financial Law, which imposes a maximum limit of debt-to-GDP ratio at 60% and budget deficit at 3%. The debt ratio has reversed and stayed well below the threshold since then, though it has been argued that Indonesia's safe debt limit should be lower (Fournier & Bétin 2018; Figure 1). While the headline fiscal deficit remains below the official limit, the primary balance has turned from surplus to deficit since 2011.…”