EXAMINING THE EXTERNAL DEBT CRISIS IN INDONESIA FROM ISLAMIC PERSPECTIVE

Khonsa Tsabita

Abstract


One of major economic problems particularly in developing countries is external debt crisis. Several developing countries including Indonesia have paid their external debt more than total fund they have received from developed countries. Moreover, the indebted country has to pay the interest every year which the amount keeps accruing. Debt is the main causes of poverty since most of them are “unjust” debt. Islam discourages Muslims to depend their life on borrowing money, including at the state level. This research attempts to scrutinize the issue of external debt crisis and try to come out with solution on the problem of external debt crisis in Indonesia from Islamic perspective. This paper is using a qualitative analysis approach, and collecting external debt data from Central Bank of Indonesia and World Bank. Findings indicate that the current system on managing external debt crisis in Indonesia has not been successful and need to be examined from different framework. Overall, this paper contributes to literatures on debt crisis and provide some alternative solutions to government to manage the external debt crisis.



DOI: http://dx.doi.org/10.22373/share.v7i1.2297

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