Bank Indonesia Reveals Indonesia's Foreign Debt Drops In April 2023

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) reported that Indonesia's foreign debt (ULN) in April 2023 fell compared to the previous month.

Head of the BI Communications Department Erwin Haryono said that Indonesia's external debt position at the end of April 2023 was recorded at US$403.1 billion, lower than the ULN position at the end of March 2023 of US$403.3 billion.

For this development, Indonesia's external debt on an annual basis experienced a growth contraction of 1.3 percent year on year (yoy), continuing its contraction in the previous month of 1.8 percent. This external debt growth contraction mainly comes from a decline in external debt in the private sector," he said in a written statement on Thursday, June 15.

Erwin explained that the government's external debt position at the end of April 2023 was recorded at 194.1 billion US dollars, relatively stable compared to the previous month's position of 194.0 billion US dollars.

"An annual government external debt position grew 1.8 percent yoy after experiencing a contraction of 1.1 percent in the previous month. The development of the external debt was influenced by the placement of portfolio investments in the domestic Government Securities (SBN) market in line with positive sentiment for global market players that was maintained," he said.

According to Erwin, the withdrawal of government external debt in April 2023 is still prioritized to support the financing of the productive and priority sectors, especially to maintain the momentum of Indonesia's economic recovery amid the uncertainty of the global economy.

"The government continues to be committed to managing external debt carefully, efficiently, and accountably, including maintaining credibility in fulfilling basic and interest payment obligations on time," he stressed.

On the other hand, private external debt continued its growth contraction trend. He said, the position of private external debt at the end of April 2023 was recorded at 199.6 billion US dollars, down from the previous month's position of 199.9 billion US dollars.

Erwin added, on an annual basis, private external debt contracted by 4.5 percent yoy, deeper than the contraction in the previous month of 2.8 percent.

It was stated that the growth of external companies instead of financial institutions (non-financial corporates) and financial institutions (financial corporates) each experienced a contraction of 4.7 percent yoy and 3.9 percent, deeper than last month's contraction, which was recorded at 2.8 percent and 3.0 percent, respectively.

"Based on the economic sector, the largest private external debt includes the financial services sector, processing industry, electricity and mining procurement," he added.

Erwin ensured that the structure of Indonesia's external debt remained healthy, supported by the application of prudential principles in its management.

It is noted that Indonesia's external debt in April 2023 remained under control, as reflected in the ratio of Indonesia's external debt to Gross Domestic Product (GDP) which fell to 29.8 percent compared to the ratio in the previous month of 30.1 percent.

In addition, the structure of Indonesia's external debt remains healthy, shown by the dominance of long-term external debt with a share reaching 87.6 percent of the total external debt.

"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," he said.

"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," Erwin concluded.