Michelle Natalia
IDXChannel - The position of external debt in Indonesia decreased in April 2023 compared with the conditions one month earlier.
At the end of April 2023, the position of external debt in Indonesia stood at USD403.1 billion, down from USD403.3 billion in March 2023.
"Annually, therefore, the external debt position in Indonesia experienced a 1.3% (yoy) contraction to maintain the 1.8% (yoy) contraction recorded the month earlier. The decrease stemmed from a lower private external debt position," Bank Indonesia (BI) Communication Department Executive Director Erwin Haryono said in a release on Thursday (15/6/2023).
Government external debt remained manageable. At the end of April 2023, government external debt was recorded at USD194.1 billion, relatively stable compared with USD194.0 billion in the previous period.
Annually, government external debt grew 1.8% (yoy) in April 2023 after contracting 1.1% (yoy) the month earlier.
"This was driven by portfolio investment placements in the domestic government securities (SBN) market given the maintained positive sentiment of global financial market players," he added.
External debt withdrawal in April 2023 remained focused on support to fund productive and priority sectors, particularly ongoing efforts to maintain economic recovery momentum in Indonesia amid global economic uncertainty.
"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 continued.
Such 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 (14.3%); 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 99.9% of total government external debt, dominated by long-term maturities," he explained.
Private external debt maintained the contractionary trend. The position of private external debt was down to USD199.6 billion at the end of April 2023 from USD199.9 billion the month earlier.
Annually, private external debt experienced a deeper 4.5% (yoy) contraction in April 2023 compared with a 2.8% (yoy) contraction in March 2023.
Such developments were underpinned by external debt at non-financial and financial corporations, which experienced deeper 4.7% (yoy) and 3.9% (yoy) contractions, respectively, after contracting 2.8% (yoy) and 3.0% (yoy) the month earlier.
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, 75.5% 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 April 2023, as reflected by a ratio of external debt to gross domestic product (GDP) of 29.8% in the reporting period, retreating from 30.1% one month earlier," he stated.
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 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)
