The government remains committed to maintaining credibility by fulfilling obligations to pay principal and interest on debt in a timely manner, and managing external debt in a prudent, credible and accountable manner.
Jakarta (Armfalcon.com) – Bank Indonesia (BI) reported that Indonesia’s external debt (ULN) in February 2023 was recorded at US$400.1 billion, a decrease compared to January 2023’s external debt of US$404.6 billion.
“This development was caused by a decline in public sector (government and central bank) and private sector external debt,” said Executive Director of the BI Communication Department Erwin Haryono in an official statement in Jakarta, Friday.
On an annual basis, the position of the February 2023 external debt contracted by 3.7 percent (year on year/yoy), deeper than the 2 percent (yoy) contraction in the previous month.
Erwin said the government’s external debt in February 2023 was recorded at US$192.3 billion, lower than the previous month’s position of US$194.3 billion.
On an annual basis, the government’s external debt experienced a deeper growth contraction, from 2.5 percent (yoy) in January 2023 to 4.4 percent (yoy) in February 2023.
This development was driven by a shift in the placement of non-resident investors’ funds in domestic government securities (SBN) in line with the high volatility of global financial markets.
The government remains committed to maintaining credibility by fulfilling obligations to pay debt principal and interest in a timely manner, and managing external debt in a prudent, credible and accountable manner.
As one of the components in the financing instrument for the state revenue and spending budget (APBN), the use of external debt continues to be directed to focus on supporting the government’s efforts to finance productive sectors and priority spending, particularly in order to support and maintain Indonesia’s economic growth to remain solid amidst the uncertainty of global economic conditions. .
This support includes, among other things, the health services sector and social activities (24 percent of the total government external debt), government administration, defense, and compulsory social security (17.8 percent), education services (16.7 percent), construction (14, 2 percent), as well as financial services and insurance (10.4 percent).
“The government’s external debt is relatively safe and under control considering that almost all external debt has long-term tenors with a share of 99.9 percent of the government’s total external debt,” he said.
In addition, the position of private external debt in February 2023 was valued at US$198.6 billion, a decrease compared to the previous month’s position of US$201.0 billion.
On an annual basis, private external debt experienced a deeper growth contraction, from 1.7 percent (yoy) in January 2023 to 3.4 percent (yoy) in February 2023.
This development was caused by a contraction in the growth of financial institution external debt (financial corporations) and non-financial institutions (nonfinancial corporations) by 6.2 percent (yoy) and 2.7 percent (yoy) respectively.
Based on the economic sector, the largest private external debt comes from the financial services and insurance sector; processing industry; provision of electricity, gas, steam/hot water, and cold air; as well as mining and quarrying with a share of 78.2 percent of total private external debt.
“Private external debt is still dominated by long-term external debt with a share of 75.4 percent of total private external debt,” he said.
He said Indonesia’s external debt in February 2023 remained under control, reflected in the ratio of Indonesia’s external debt to gross domestic product (GDP) which was maintained at around 29.9 percent, slightly lower than the ratio in the previous month of 30.3 percent.
In addition, Indonesia’s external debt structure remains healthy, as demonstrated by Indonesia’s external debt which is still dominated by long-term external debt, with a share of 87.6 percent of total external debt.
In order to keep the external debt structure healthy, BI and the government continue to strengthen coordination in monitoring the development of external debt, supported by the application of the precautionary principle in its management.
The role of external debt will also continue to be optimized in supporting development financing and encouraging national economic recovery, by minimizing risks that could affect economic stability.
Also read: BI: Indonesia’s foreign debt is US$404.9 billion as of January 2023
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Reporter: Martha Herlinawati Simanjuntak
Editor: Click Dewanto
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