Is Indonesia’s Foreign Debt Still Safe? This is what Bank Indonesia said

Armfalcon.com, JAKARTA — Bank Indonesia (BI) claims that Indonesia’s foreign debt (ULN) structure remains healthy. This is supported by the application of the precautionary principle in its management.

“Indonesia’s external debt remained under control in the first quarter of 2023, as reflected in the ratio of Indonesia’s external debt to gross domestic product (GDP) which remained stable at around 30.1 percent,” said BI Communications Department Executive Director Erwin Haryono, Monday (15/5/2023) .

In addition, the structure of Indonesia’s external debt remains healthy as demonstrated by Indonesia’s external debt which is still dominated by long-term external debt. Currently, the portion of long-term external debt is 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. This step is also 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 can affect economic stability,” said Erwin.

From the public sector, the government’s external debt continues the trend of contraction in growth. The government’s external debt position in the first quarter of 2023 was recorded at US$194.0 billion, or decreased by 1.1 percent yoy, lower than the contraction in the previous quarter of 6.8 percent.

Meanwhile, private external debt also experienced a contraction and was deeper. The position of private external debt in the first quarter of 2023 was recorded at US$199.4 billion, down 3.0 percent yoy, deeper than the contraction in the previous quarter of 1.7 percent yoy.

The growth of external debt of non-financial institution companies (nonfinancial corporations) and financial institutions (financial corporations) each experienced a contraction of 2.9 percent yoy and 3.5 percent yoy, deeper than last quarter’s contraction which recorded 1.4 percent and 2.7 percent 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 reaching 77.9 percent of total private external debt. Private external debt is also still dominated by long-term external debt with a share of 75.4 percent of total private external debt.

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