At this time, the debt of Indonesia from year to year instead of decreasing but rather increased. in 1998 after President Soeharto stepped down from the presidential leadership that left a debt of Rp 551.4 trillion or an equivalent of US $ 68.7 billion (Ariyanti, 2017).
At that time, the debt ratio reached 57.7 percent of GDP, since then the debt ratio of Indonesia continues to increase from year to year. In 2001, the debt ratio decreased to 77.2% from 88.7% (Ariyanti, 2017). The ratio of Indonesian debt continues to decline from every year, up to 2012 to 23% (Ariyanti, 2017). However, in 2013 the debt ratio of Indonesia again increased to 24.9% (Ariyanti, 2017).
Since then, the debt ratio of Indonesia has not decreased. although the debt ratio of Indonesia decreased, it still caused Indonesia's debt increased every year and impacted the Indonesian economy up to now that Indonesia's debt this year to 357.5 billion US dollars or about Rp 4.915 trillion (exchange rate of Rp 13,750 per US dollar) (Ariyanti, 2017). The details are 183.4 billion US dollars, equivalent to Rp 2.521 trillion of government debt and 174.2 billion US dollars or equivalent to Rp 2,394 trillion of private debt (Ariyanti, 2017). There are some impacts that can be caused due to the abundance of foreign debt owned by Indonesia.
We will have debt crisis for long term, and there are a negative and positive impact that cause by debt crisis. The negative impacts that can be caused by the foreign debt that Indonesia has, among others, is the declining value of the rupiah against dollar.
In 1997-1998 the rupiah exchange rate weakened deeply against the US Dollar. This made Indonesia's foreign debt increased drastically and to repay the debt that has matured, the government causes the repayment of principal and interest of the debt is increasing from year to year, so the policy has an effect on the decreasing state budget pefomance.
The government still relies heavily on foreign debt usage to finance national development, adding to new debts largely used only to cover maturing debts. If the policy is continuously carried out by the government, it will cause Indonesia will be trapped in a debt trap that will carry Indonesia experienced debt crises or debt crisis (Widharma, 2013).
Indonesia's foreign debt will have a positive impact on the economy, if managed well, and vice versa will be bad for the economy if not managed properly (Adwin,2000). Foreign debt can cover the budget deficit, and this is much better by printing new money, enabling the government to implement development with a relatively larger capital support. Thus the government can increase economic growth. The increasing rate of economic growth means an increase in national income. Thus the income per capita can rise. If the income per capita increases the so doeas the welfare of the community.
A country's debt can be a positive thing if used properly and effectively. State debt can help meet the needs of the state budget. Conversely, if a country's debt is not used properly it will burden the country in the future. For that the government should be able to think of ways to pay off the debts.