Indonesia’s Foreign Debt on a Downward Trend Since July 2022

JAKARTADAILY.ID – Indonesia's foreign debt stood at $400.4 billion at the end of July 2022, down from $403.6 billion in the previous month.

The latest developments stemmed from lower debt positions recorded in the public sector (Government and Central Bank) and private sector.

Annually, therefore, the position of foreign debt experienced a deeper 4.1 percent (yoy) contraction in July 2022 after contracting 3.2 percent (yoy) in the previous period.

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The lower foreign debt position was attributable to a rebalancing by non-resident investors in the domestic SBN market given persistently elevated global financial market uncertainty. 

Meanwhile, loan instruments record a higher position, primarily to support program and project loans for Covid-19 handling, infrastructure development as well as other development projects and programs. 

Foreign debt disbursements in July 2022 remained oriented towards productive sector financing and accelerating the national economic recovery. 

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Government foreign debt provided funding support for productive sectors and priority expenditures in the reporting period targeted, amongst others, human health and social activities (24.5 percent of total government external debt), education (16.5 percent), public administration, defense and compulsory social security (15.1 percent), construction (14.2 percent) as well as insurance and financial services (11.8 percent). 

The Government remains firmly committed to maintaining credibility by servicing principal and interest payments punctually, coupled with prudential, credible, and accountable foreign debt management. 

The current position of government foreign debt is considered safe and manageable in terms of short-term refinancing risk, with approximately 99.7 percent dominated by long-term maturities.

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The position of private foreign debt in July 2022 decreased to $206.3 billion from $207.7 billion in the previous month.