BANK Indonesia (BI) noted that Indonesia’s foreign debt (ULN) position in February 2024 remained under control at US$407.3 billion. This figure grew 1.4% (yoy) compared to the previous month’s position which rose 0.2% (yoy).
“The increase mainly came from the public sector, both the government and the central bank. The development of the external debt position was also influenced by the weakening factor of the US dollar against several global currencies, including the rupiah,” said Assistant Governor to the Head of the Bank Indonesia Communications Department Erwin Haryono, Thursday ( 4/19).
The government’s external debt remains under control and is managed in a measurable, efficient and accountable manner. The government’s external debt position in February 2024 was recorded at US$194.8 billion.
It grew 1.3% (yoy) compared to an increase of 0.1% (yoy) in the previous month. “The development of government external debt was mainly due to the withdrawal of foreign loans, especially multilateral loans, to support the financing of several government programs and projects,” said Erwin.
As a component of the APBN financing instrument and in order to continue the momentum of economic growth, the use of external debt continues to be directed at supporting government efforts in financing the productive sector and priority spending.
Government external debt continues to be managed carefully, credibly and accountably to support spending, including in the health services sector and social activities (21.1% of total government external debt); government administration, defense, and mandatory social security (18.1%); educational services (16.9%); construction (13.7%); and financial and insurance services (9.7%).
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“The position of government external debt is relatively safe and under control considering that almost all external debt has long-term tenors with a share reaching 99.98% of the total government external debt,” said Erwin.
Private external debt continues to contract growth. The position of private external debt in February 2024 was recorded as stable at around US$197.4 billion.
On an annual basis, private external debt experienced a growth contraction of 1.3% (yoy). This continued the contraction in the previous month of 2.3% (yoy).
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The contraction in external debt growth came from financial institutions (financial corporations) and non-financial corporations, each at 1.3% (yoy).
Based on economic sector, the largest private external debt comes from the processing industry sector; financial and insurance services; supply of electricity, gas, steam/hot water, and cold air; as well as mining and quarrying, with a share reaching 78.3% of total private external debt.
“Private ULN also remains dominated by long-term ULN with a share reaching 76.3% of total private ULN,” said Erwin.
Indonesia’s external debt structure remains healthy, supported by the application of the precautionary principle in its management. This is reflected in the ratio of Indonesia’s external debt to gross domestic product (GDP) of 29.5% and is dominated by long-term external debt with a share reaching 86.9% of the total external debt.
In order to ensure that the external debt structure remains healthy, Bank Indonesia 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 sustainable national economic growth by minimizing risks that could affect economic stability,” said Erwin. (Z-2)
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