Good News! Indonesia's Foreign Debt Shrinks 3.8 Billion Dollars In A Month

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) released information that there was a decline in foreign debt (ULN) at the end of May 2022 to 406.3 billion US dollars from the previous 410.1 billion US dollars in April 2022. This note indicates that Indonesia's external debt has decreased by around 3 .8 billion US dollars in just one calendar month.

Head of the BI Communications Department, Erwin Haryono, said the development was caused by a decline in the position of external debt in the public sector (government and central bank) and the private sector.

"The government's external debt in the May period consistently continued the downward trend", he said in a written statement on Friday, July 15.

According to Erwin, the government's external debt stood at 188.2 billion US dollars or shrunk from the previous 190.5 billion US dollars.

"The downward trend in external debt occurred in line with several series of Government Securities (SBN) maturing in May 2022 and the influence of global sentiment that triggered a shift in portfolio investment in the domestic SBN market by non-resident investors", he said.

Meanwhile, foreign loans experienced a slight increase from the previous month, especially bilateral loans from several partner institutions aimed at supporting the financing of several priority programs and projects.

“The government's external debt withdrawal is prioritized to encourage the acceleration of the National Economic Recovery (PEN) program. Bank Indonesia assesses that the Government's external debt position is relatively safe and under control when viewed from the side of short-term refinancing risk, considering that almost all of them have long-term terms reaching 99.8 percent of the total", he explained.

Meanwhile, the position of private external debt in May 2022 was recorded at 209.4 billion US dollars, down from 210.9 billion US dollars in April 2022.

"This development mainly comes from loan repayments and maturing debt securities", he said.

Furthermore, Erwin also explained that based on the private external debt sector, the largest sources came from the financial services and insurance sectors, the electricity, gas, mining, and manufacturing sectors.

"Indonesia's external debt in May 2022 remained under control, as reflected in the ratio of Indonesia's external debt to gross domestic product (GDP) which was maintained at around 32.3 percent, down from the ratio in the previous month of 32.6 percent", he said.

"The structure of Indonesia's external debt remains healthy, supported by the application of the precautionary principle in its management", concluded Erwin.