Good News Ahead of Eid, Indonesia's Foreign Debt Decreases IDR 66.6 Trillion

JAKARTA – Bank Indonesia (BI) reported that there was a decrease in the amount of Indonesia's foreign debt (ULN) by USD 4.5 billion or equivalent to IDR 66.6 trillion.

Head of the BI Communication Department Erwin Haryono said that the figure was the last calculation in February 2023 which amounted to USD 400.1 billion, a decrease compared to January 2023 which amounted to USD 404.6 billion.

"This development was caused by a decrease in public sector (government and central bank) and private sector external debt," he said when delivering a written statement on Friday, April 14.

According to Erwin, the sloping of Indonesia's foreign obligations is also visible when viewed on an annual basis, aka year on year (yoy). It was stated that the position of the February external debt contracted by 3.7 percent yoy.

"That percentage is deeper than the 2 percent contraction in January," he said.

In detail, Erwin explained that the total government debt was USD 192.3 billion, lower than the previous month's position of USD 194.3 billion. This development was driven by a shift in the placement of non-resident investors' funds in domestic Government Securities (SBN) in line with the high volatility of global financial markets.

"The government remains committed to maintaining credibility by fulfilling obligations to pay debt principal and interest in a timely manner, and managing external debt in a prudent, credible and accountable manner," he stressed.

Meanwhile, private external debt in February 2023 amounted to US$198.6 billion, a decrease compared to the previous month's position of US$201.0 billion. This positive signal was supported by a contraction in the growth of financial institutions (financial corporations) and non-financial corporations, respectively, by 6.2 percent yoy and 2.7 percent yoy.”

"Private foreign debt is dominated by long-term external debt with a share of 75.4 percent of the total," he said.

Erwin ensured that the structure of Indonesia's external debt remained healthy, supported by the application of the precautionary principle in its management. The tone of optimism is reflected in the ratio of Indonesia's external debt to Gross Domestic Product (GDP) which was maintained at around 29.9 percent or slightly decreased compared to the previous month's ratio of 30.3 percent.

In addition, Indonesia's external debt structure remains healthy, as demonstrated by Indonesia's external debt which is still dominated by long-term external debt, with a share of 87.6% of total external debt.

"In order to maintain a healthy external debt structure, Bank Indonesia and the Government continue to strengthen coordination in monitoring the development of external debt, supported by the application of the precautionary principle in its management. The role of external debt will also continue to be optimized in supporting development financing and encouraging national economic recovery, by minimizing risks that can affect economic stability," concluded Erwin.