MoF, BI: Indonesias External Debt Under Control
Date 17 Juni 2019
Report from Ministry of Finance and Bank Indonesia stated that Indonesia’s external debt is manageable with solid structure. The external debt at the end of April 2019 stood at USD389.3 billion, consisted of a USD189.7 billion government and central bank debt and a USD199.6 billion private debt (including state-owned enterprises).
Indonesia’s external debt, according to the report, grew 8.7% (yoy), which was higher than the 7.9% (yoy) growth in March 2019. This was due to the net foreign debt withdrawals and the strengthening rupiah against US dollar which resulted in a more significant amount of rupiah debt in terms of US dollar.
The increase in external debt growth, based on the report, came from private sector external debt, amid a slowdown growth of government external debt.
The Government external debt growth tends to slow down. As of April 2019, the debt amounted to USD186.7 billion. It recorded a slower growth of 3.4% (yoy) compared to 3.6%(yoy) growth in the previous month.
The development was influenced by debt repayments totaling USD0.6 billion and a decrease of USD0.4 billion in ownership of Government Securities (SBN) from the non-resident property, following the global financial market uncertainty as trade tension escalated.
The Government external debt management was prioritized to finance development, which most of them went to productive sectors to promote growth in the economy and public welfare. The sectors were health services and social works (18.8% of government external debt), constructions (16.3%), education (15.8%), public administration, defense, and social security (15.1%) and financial and insurance (14.4%).
The report also stated that private external debt, by the end of April 2019, grew 14.5% (yoy), higher than 13.0% (yoy) growth in the previous month.
The private debt was dominated by the financial and insurance sector, manufacturing industry sector, electricity, gas, and water supply sector, and mining and drilling sector, with a total share of 75.2% of total private external debt.
Ministry of Finance and Bank Indonesia assessed that Indonesia’s external debt structure remained solid. The condition was reflected in, among others, the 36.5% ratio of Indonesia’s external debt to Gross Domestic Product (GDP) at the end of April 2019, which was relatively stable compared to the ratio in the previous month.
In addition, the structure of Indonesia’s external debt remained primarily dominated by long term debt, accounted for 86.2% of the total external debt. Thus, despite the rise of Indonesia’s external debt, the debt is still under control, with a solid structure.
Bank Indonesia and the Government will continue to maintain their coordination to monitor external debt and to optimize their role in supporting development financing, by minimizing the risk that may affect macroeconomic stability. (BI Communication Department/ES)
Translated by : Fairuzzamani Inayatillah
Edited by : Ridwan Ibadurrohman, Mia M. Bonaedy