BI: Indonesia's Foreign Debt Drops 4.7 Billion Dollars In May 2023

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) informed that Indonesia's Foreign Debt (ULN) in May 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 May 2023 was recorded at 398.3 billion US dollars.

This figure is down 4.7 billion US dollars compared to the position of ULN at the end of April 2023 of 403.0 billion US dollars.

For these developments, Indonesia's external debt on an annual basis contracted 1.7 percent year on year (yoy), deeper than the contraction in the previous month of 1.3 percent. This external debt growth contraction mainly stems from the decline in external debt in the private sector," he said during a written statement, Monday, July 17.

Erwin explained that government external debt (including central banks) decreased compared to last month. The government's external debt position at the end of May 2023 was recorded at 192.6 billion US dollars, down from the previous month's position of 194.1 billion US dollars, or on an annual basis grew 2.3 percent (yoy).

"The decline in the position of government external debt is due to net payments for foreign loans and several series of domestic Government Securities (SBN) maturing," he said.

Erwin revealed that the government remains committed to managing external debt carefully, efficiently, and accountably, including maintaining credibility in fulfilling basic and interest payment obligations on time.

It was stated that as one of the components in the State Budget financing instrument, the use of government external debt continues to be directed to support the productive sector and priority spending, especially in order to maintain solid economic growth in Indonesia amidst global economic uncertainty.

"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 99.8% of the total government's external debt," he said.

Then, private external debt also decreased compared to the previous month. The position of private external debt at the end of May 2023 was recorded at 196.5 billion US dollars, down from the position in the previous month of 199.5 billion US dollars.

On an annual basis, private external debt contracted by 5.8 percent (yoy), deeper than the previous month's contraction of 4.6 percent. This private external debt contraction was contributed by the decline in external debt for non-financial companies and financial institutions (financial corporates).

As for the economic sector, the largest private external debt, among others, comes from the financial services and insurance sector, the manufacturing industry, electricity procurement, as well as mining and quarrying,

"Vocational external debt is also still dominated by long-term external debt with a share of 74.8 percent of total external debt," 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. He also said that Indonesia's external debt in May 2023 remained under control, as reflected in the ratio of Indonesia's external debt to Gross Domestic Product (GDP) which fell to 29.7 percent compared to the ratio in the previous month of 30.0 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 87.3 percent of the total external debt.

"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.