International Journal of Economics (IJEC)
Vol. 2 No. 1 (2023): January-June

Does Foreign Direct Investment Reduce Growth Government Debt?

Dina Hendiyani (Indonesian National Islamic University, Aceh Indonesia)
Zainuddin Iba (Indonesian National Islamic University, Aceh Indonesia)



Article Info

Publish Date
30 Jun 2023

Abstract

The problem of fiscal deficits in the Indonesian economy has prompted the government to increase debt as a solution to reduce the deficit. Debt withdrawal in the long term without the support of an increase in state revenues has had a negative impact. Government debt increased sharply. Efforts to increase state revenue through tax collection in post-Covid 19 economic conditions that have not yet recovered will only reduce economic activity. This requires efforts to suppress government debt growth amidst a fiscal deficit. This study aims to analyze the effect of foreign direct investment, inflation and the exchange rate on government debt. Foreign direct investment is believed to be a source of financing that cannot be made through state revenue. Especially public infrastructure financing. The study concluded that it was found: foreign direct investment, inflation, and the exchange rate had a significant effect on government debt. Thus, government efforts are needed to encourage the growth of foreign direct investment, through policies that are oriented towards increasing foreign direct investment.

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Journal Info

Abbrev

ijec

Publisher

Subject

Economics, Econometrics & Finance

Description

International Journal of Economics (IJEC) E-ISSN. 2961-712X is a refereed publication that comes to address the Economic and Administration challenges that economic units of various nature face in today’s rapidly changing international economic environment. It is designed to publish original and ...