Indonesia's Foreign Debt In August 2023 Down To 395.1 Billion US Dollars, BI: Staying Under Control

JAKARTA - Indonesia's Foreign Debt (ULN) in August 2023 decreased from the previous month.

The position of external debt as of the end of August 2023 was recorded at 395.1 billion US dollars.

This amount decreased by 2 billion US dollars compared to the July 2023 external debt of 397.1 billion.

The decline in external debt positions comes from public and private sector external debt.

On the other hand, Indonesia's external debt on an annual basis contracted growth by 0.8 percent (yoy), deeper than the contraction in the previous month of 0.7 percent (yoy).

Head of the Communication Department of Bank Indonesia (BI) Erwin Haryono said Indonesia's external debt structure remained healthy, supported by the application of prudential principles in its management.

"Indonesia's external debt in August 2023 remained under control as reflected in the ratio of Indonesia's external debt to Gross Domestic Product (GDP) which fell to 29.1 percent, from 29.2 percent in the previous month, and was dominated by long-term external debt with a share of 87.4 percent of total external debt", he explained in his official statement, Monday, October 16, 2023.

Erwin said, in order to keep the external debt structure healthy, Bank Indonesia and the government continue to strengthen coordination in monitoring the development of external debt, supported by the application of prudential principles in its management.

In addition, the role of external debt will also continue to be optimized in supporting development financing and encouraging sustainable national economic growth, by minimizing risks that can affect economic stability.

On the other hand, government external debt fell when compared to last month. If the government's external debt position at the end of August 2023 was recorded at 191.6 billion US dollars, it was down when compared to the previous month which amounted to 193.2 billion US dollars, or an annual growth slowed to 3.6 percent (yoy) from the previous period of 4.1 percent (yoy).

Erwin said the development of the external debt was influenced by the transfer of non-resident investor funds to the domestic Government Securities (SBN) market in line with the volatility in the global financial market.

In addition, the government is committed to maintaining credibility by fulfilling the obligation to pay principal and interest on time, as well as managing external debt carefully, efficiently, and accountably.

According to Erwin, external debt plays an important role in supporting the government's efforts to finance the productive sector and prioritize spending so that it is able to support and keep Indonesia's economic growth solid amid uncertainty in global economic conditions.

Erwin said that the government's external debt position is relatively safe and under control considering that almost all external debt has a long-term tenor with a share of 99.9 percent of the total government's external debt.

In line with that, private external debt also fell when compared to the previous month which amounted to 194.5 billion US dollars in July 2023 to 194.3 billion US dollars in August 2023.

Meanwhile, on an annual basis, private external debt contracted growth by 5.2 percent (yoy), continuing its contraction in the previous month by 5.5 percent (yoy).

He explained that the decline in private external debt was mainly due to the increasing contraction in external debt growth of non-financial companies (non-financial corporates) to 5.1 percent (yoy) compared to the contraction of 4.3 percent (yoy) in the previous period.

Based on the economic sector, the largest private external debt comes from the manufacturing, financial services and insurance sector, procurement of electricity, gas, steam/hot water, and cold air as well as mining and quarrying, with a share of 78.2 percent of the total private external debt.

Meanwhile, private external debt is also still dominated by long-term external debt with a share of 74.9 percent of total private external debt.