Government's External Debt Drops Due To Transfer Of Investor Funds

Rupiah illustration (Photo: dock. Antara)

JAKARTA - Bank Indonesia recorded government Foreign Debt (ULN) in the third quarter of 2023 amounting to USD 188.3 billion, down from the previous quarter's position of USD 192.5 billion, or an annual growth of 3.3 percent (yoy).

BI Communications Director Erwin Haryono said the decline in the government's external debt position was influenced by the transfer of non-resident investor funds to the domestic Government Securities (SBN) market to other instruments in line with the increasing volatility in the global financial market.

"In addition, the Government is committed to maintaining credibility by fulfilling the obligations of principal payments and interest on time, as well as managing external debt carefully, efficiently, and accountably," Ujari said in his official statement, November 17.

Erwin said that as one of the components in the State Budget financing instrument, the use of external debt continues to be directed to focus on supporting the Government's efforts to finance the productive sector and prioritize spending, so as to be able to support and keep Indonesia's economic growth solid amid increasing uncertainty in global economic conditions.

This support includes, among others, the health services sector and social activities by 23.9 percent of the total government external debt, government administration, defense, and mandatory social security by 18.3 percent.

Furthermore, the education services sector was 16.7 percent, construction was 14.2 percent, and financial services and insurance was 10.1 percent. 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.

Previously, BI recorded Indonesia's external debt in the third quarter of 2023 of US$393.7 billion, down compared to the external debt position at the end of the second quarter of 2023, reaching US$396.5 billion.