Michelle Natalia
IDXChannel - The position of external debt in Indonesia stood at USD400.1 billion at the end of February 2023, down from USD404.6 billion in the previous month, according to Bank Indonesia (BI).
“ The decrease stemmed from lower external debt positions recorded in the public sector (Government and Central Bank) as well as private sector. Annually, the external debt position in February 2023 experienced a 3.7% (yoy) contraction, deeper than a 2.0% (yoy) contraction recorded the month earlier,” BI Communication Department Executive Director Erwin Haryono said in a press release on Friday (14/4/2023).
Government external debt declined from the previous month. In February 2023, government external debt was recorded at USD192.3 billion, lower than the USD194.3 billion position in the previous period.
Annually, government external debt experienced a deeper 4.4% (yoy) contraction in February 2023 compared with a 2.5% (yoy) contraction in January 2023.
“This was driven by a rebalancing of non-resident investor asset placement in domestic government securities (SBN) given persistently high global financial market volatility. The Government remains firmly committed to preserving credibility in servicing principal and interest payments promptly, as well as maintaining prudential, credible and accountable external debt management,” he explained.
As a component of State Budget (APBN) financing instruments, external debt allocation remained focused on supporting government efforts to fund productive sectors and priority expenditures, particularly ongoing efforts to bolster and maintain solid economic growth in Indonesia amid global economic uncertainty.
Such support encompasses human health and social activities (24.0% of total government external debt), public administration, defence and compulsory social security (17.8%), education (16.7%), construction (14.2%), as well as insurance and financial services (10.4%), amongst others.
“The current position of government external debt is considered safe and manageable, with nearly all, or 99.9% of total government external debt, dominated by long-term maturities,” he added.
Private external debt also decreased from the previous month. The position of private external debt was down to USD198.6 billion in February 2023 from USD201.0 billion the month earlier.
Annually, private external debt experienced a deeper 3.4% (yoy) contraction in February 2023 compared with a 1.7% (yoy) contraction in January 2023.
“Such development was underpinned by external debt at financial and non-financial corporations, which experienced a 6.2% (yoy) and 2.7% (yoy) contraction, respectively,” he stated.
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 78.2% of total private external debt.
Furthermore, 75.4% 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 February 2023, as reflected by a ratio of external debt to gross domestic product (GDP) maintained at 29.9% in the reporting period, retreating slightly from 30.3% one month earlier,@ he continued.
In addition, the sound structure of external debt in Indonesia is dominated by long-term debt, accounting for 87.6% of total external debt.
“Seeking to maintain a healthy structure, Bank Indonesia and the Government continued to strengthen 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 accelerate the national economic recovery, as well as minimise the risks that could impact economic stability,” he concluded.
(WHY)
