Indonesia's External Debt Down to USD398 Billion in May 2023

The position of external debt in Indonesia declined in May 2023, compared from the previous period, according to Bank Indonesia (BI).

IDXChannel - The position of external debt in Indonesia declined in May 2023, compared from the previous period, according to Bank Indonesia (BI).

At the end of May 2023, the position of external debt in Indonesia stood at USD398 billion, down from USD403 billion in April 2023.  

"Annually, therefore, the external debt position in Indonesia experienced a deeper 1.7% (yoy) contraction compared with a 1.3% (yoy) contraction recorded one month earlier. The contraction primarily stemmed from a lower private external debt position," said BI Communication Department Executive Director Erwin Haryono in a media release on Monday (17/7/2023).

Government external debt declined from the previous period. At the end of May 2023, government external debt was recorded at USD192 billion, down from USD194 billion in April 2023, or growing 2.3% (yoy) annually.  

"This was driven by a net payment on government's foreign loans and several series of maturing domestic government securities (SBN). The Government remains firmly committed to maintaining prudential, efficient and accountable external debt management, as well as preserving credibility in servicing principal and interest payments promptly," he stated.

As a component of State Revenue and Expenditure Budget (APBN) financing instruments, external debt in May 2023 remained focused on support to fund productive and priority sectors, particularly ongoing efforts to maintain solid economic growth in Indonesia amid global economic uncertainty.  

External debt support encompasses human health and social activities (24.1% of total government external debt); public administration, defence and compulsory social security (17.9%); education (16.8%); construction (14.2%); as well as insurance and financial services (10.2%), amongst others.  

"The current position of government external debt is considered safe and manageable, with nearly all, or 99.8% of total government external debt, dominated by long-term maturities," he added.

Private external debt also declined in comparison to the previous month. The position of private external debt retreated to USD196 billion at the end of May 2023 from USD199 billion the month earlier.  

Annually, private external debt experienced a deeper 5.8% (yoy) contraction in May 2023 compared with a 4.6% (yoy) contraction in April 2023. 

"Such developments were underpinned by external debt at non-financial and financial corporations, which experienced a 5.3% (yoy) and 7.6% (yoy) contractions, respectively, compared with  4.8% (yoy) and 3.9% (yoy) contractions one month earlier," he continued.

By sector, the main contributors to private external debt in the reporting period were insurance and financial services; the manufacturing industry; electricity, gas, steam and air conditioning supply; as well as mining and quarrying, accounting collectively for 78.0% of total private external debt.  

Furthermore, 74.8% of total private external debt was dominated by long-term tenors.

"The structure of external debt in Indonesia remains sound, supported by prudential management. External debt was still manageable in May 2023, as reflected by a ratio of external debt to gross domestic product (GDP) of 29.7% in the reporting period, down from 30.0% one month earlier," he stressed.

In addition, the sound structure of external debt in Indonesia is dominated by long-term debt, accounting for 87.3% of total external debt.  

"Seeking to maintain a healthy structure, Bank Indonesia and the Government continued strengthening coordination in terms of monitoring external debt, supported by the application of prudential principles, while optimising the role of external debt to support development financing and promoting sustainable economic growth, as well as minimise the risks that could impact economic stability," he concluded. (WHY)