BI: Weakening Dollar Makes Indonesias Foreign Debt Increase
As of July 2024, Indonesia's external debt (Utang Luar Negeri or ULN) stands at USD 414.3 billion, reflecting a 4.1 percent increase compared to the previous year. This external debt encompasses liabilities from the government, Bank Indonesia, and the private sector.
The rise in ULN during July 2024 is also attributed to the depreciation of the US dollar against most global currencies, including the rupiah, as noted in an official statement from Bank Indonesia (BI) by Assistant Governor Erwin Haryono on Thursday, September 19, 2024.
Out of the total USD 414.3 billion in ULN, government debt accounts for USD 194.3 billion, which represents a year-on-year increase of 0.6 percent. Previously, in March and June 2024, government ULN had decreased by 0.9 percent and 0.8 percent, respectively.
The increase in government ULN is primarily due to the acquisition of foreign loans and a rise in foreign capital inflows through government-issued state securities (Surat Berharga Negara or SBN).
Government debt constitutes approximately 30 percent of the total external debt, while the remaining 70 percent is domestic debt. By July 2024, the total government debt has surpassed IDR 8,500 trillion.
Bank Indonesia reports that the utilization of government ULN is primarily directed towards financing the health services and social activities sector (20.9 percent), government administration, defense, and mandatory social security (18.9 percent), education services (16.8 percent), construction (13.6 percent), and financial and insurance services (9.4 percent).
Nearly all of the government ULN is characterized by long-term tenors, with a proportion of 99.98 percent of the total debt, according to BI's statement.
On the other hand, the private external debt (ULN) has once again experienced a contraction. As of July 2024, private external debt was recorded at USD 195.2 billion, reflecting a decrease of 0.1 percent year-on-year compared to the previous year, following a growth of 0.3 percent in June 2024 and a contraction of 1.2 percent in March 2024.
This decline in private external debt is primarily attributed to a contraction of 0.04 percent year-on-year in the debt of non-institutional enterprises.
The largest portion of private external debt originates from the manufacturing sector, financial and insurance services, electricity and gas supply, as well as mining and excavation, contributing to a total of 78.9 percent. Furthermore, private external debt is predominantly long-term, accounting for 76.3 percent of the total.
Bank Indonesia has indicated that the structure of external debt in Indonesia remains in a healthy condition. This is evidenced by the stable ratio of external debt to Gross Domestic Product (GDP) at 30.2 percent, with long-term external debt dominating at a share of 84.9 percent of the total external debt.
