Improving Public Debt Management
In the OIC Member Countries
107
B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkThe legal framework for the debt management is laid down in a number of laws, in particular
Law 24/2002 on Government Securities, Law 17/2003 on State Finances, Law 1/2004 on the
State Treasury, Law 15/2004 on Management Oversight and Fiscal Responsibility, Law
19/2008 on Sharia Securities and a number of governmental regulations. Debt can only be
issued through the budgetary process and thus needs parliamentary approval. For the last two
fiscal years, the budget law already gives the government flexibility to raise more funds (using
accumulated cash surplus and/or debt instruments) if the state budget deficit is projected to
exceed the target as in the budget. Such additional financing is then reported in Central
Government Financial Report for the relevant fiscal year. Yet, the deficit must not exceed the
limit of 3% of GDP as stipulated in Law 17/2003.
Managerial structure (incl. coordination with other policies)Debt is issued and managed by the Directorate General of Budget Financing and Risk
Management (DGBFRM), which is a part of the Ministry of Finance of the Republic of Indonesia.
The Director General responsible for Budget Financing is bound by parliamentary approval on
debt uptaking and by instructions from the minister of finance and the president. He
coordinates policies with the Ministry of Planning and the Bank of Indonesia in regular
meetings in order to avoid repercussions in other policy areas and to coordinate monetary and
fiscal policies. The DGBFRM is a firstechelon unit directly below the minister; it underwent
several institutional changes and has been established in its present form in 2015 by the
Minister of Finance through regulation no. 234 of 2015 (Directorate General of Budget
Financing and Risk Management 2015).
The Directorate General of Budget Financing and Risk Management has seven directorates and
a support unit. Front office functions are carried out by the Directorate of Loans and Grants,
the Directorate of Government Debt Securities, the Directorate of Sharia Financing, the
Directorate of State Financial Risk Management, and the Directorate of Government Support
and Infrastructure Funding Management. The Directorate of Financing Strategy and Portfolio,
the Directorate of Evaluation, Accounting, and Settlements and the Secretariat of the
Directorate General as supporting and coordinating unit complement the front office units.
The Directorate General is given management targets in a performance contract between the
minister of finance and the Directorate General, which formulates strategic objectives. These
are measured through key performance indicators using the balanced scorecard methodology.
Debt reportingPublic debt is reported in much detail and very transparently. All important documents are
available online at the DGBFRM’s homepage (Ministry of Finance 2017), most of them are
available also in an English version. Specifically, DGBFRM publishes an annual report, the
mediumterm State Debt Management Strategy, the annual debt strategy, and monthly the
general government debt profile. It annually provides information on domestic government
securities trading per month, ownership of domestic tradable government securities, debt
maturity profile, external debt statistics, public sector debt statistics and additional
information. The disclosure of information is in accordance with Law No. 14 of 2008 on Public
Information Disclosure that mandates state and nonstate public institutions to provide
transparent information.