Indonesia's Foreign Debt Rises 2.7% to US$408.6bn in Q2 of 2024: Bank Indonesia

TEMPO.CO, Jakarta - Bank Indonesia (BI) reported that Indonesia's foreign debt rose 2.7 percent year-on-year (YoY) to US$408.6 billion in the second quarter of 2024. The increase came after Indonesia recorded a decline in the first quarter of 2024 with US$403.9 billion compared to the fourth quarter of 2023 with US$408.5 billion.

"The source of this increase was both the public and private foreign debt,” said Head of the BI Communication Department Erwin Haryono in an official statement on Thursday, August 15, 2024.

Erwin explained that the government's foreign debt recorded another growth contraction of 0.8 percent YoY at US$191 billion, after a 0.9 contraction in the first quarter.

"This development is mainly influenced by the adjustment of non-resident investor fund placement in domestic Government Securities (SBN), along with the still high uncertainty of the global financial market," he said.

The government is committed to maintaining its credibility by paying debt principal and interest on time and managing the debt insofar as to gain the most efficient and optimal funding. 

As one of the components in the State Budget financing instrument, said Erwin, foreign debt continues to be utilized as support for financing productive sectors and priority spending. 

Based on the economic sector, the government's foreign debt mainly includes the health services and social activities sector, covering 20.9 percent of the government's total foreign debt. 

It is followed by government administration, defense, and mandatory social security sectors with 18.8 percent. The education services sector covers 16.8 percent, construction covers 13.6 percent, and financial services and insurance covers 9.5 percent.

"The government's foreign debt remains under control, considering that almost all has a long-term tenor with a share reaching 99.99 percent of the government's total foreign debt," said Erwin.

Meanwhile, Indonesia’s private foreign debt in the second quarter of 2024 was recorded at US$196.5 billion or grew 0.3 percent yoy, after experiencing a growth contraction of 1.2 percent yoy in the first quarter of 2024. 

Based on the economic sector, the largest private foreign debt comes from the manufacturing industry, financial services, and insurance, followed by electricity and gas procurement, and mining and excavation. 

Private foreign debt also remains dominated by long-term debt with a share reaching 76.7 percent of the total debt. 

According to Bank Indonesia, Indonesia's foreign debt structure remains healthy, supported by the principle of prudence implementation in its management. This is reflected in the 29.9 percent ratio between Indonesia's foreign debt to its Gross Domestic Product (GDP). 

Erwin continued that the government will strive to utilize foreign debt to support financing the development and encourage sustainable national economic growth. "It will be conducted by minimizing the risk that could affect economic stability,” he said. 

ANNISA FEBIOLA

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