Huge Private Sector Foreign Debt is Common: BI

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  • Utang Luar Negeri Turun

    Utang Luar Negeri Turun

    TEMPO.CO, Jakarta - According to Bank Indonesia senior deputy governor Mirza Adityaswara, higher foreign debt recorded by the private sector compared to the government's is a normal condition.

    "It's because the State Budget was only 10-12 percent of the Indonesian GNP," Mirza said at the Supreme Court building on Thursday, August 20, 2015.

    Mirza added that the amount of foreign debt recorded by the private sector was larger because the private sector and state-owned enterprises earn higher revenue compared to the government. However, Mirza asserted that the government must take steps to control the private sector foreign debt, particularly when it does not produce foreign exchange.

    "Although the condition is common, [private sector foreign debt] must be controlled, because non-productive debt would expose a company to risks," Mirza said.

    Mirza added that a huge amount non-productive debt would also threaten the country's economy at the macroeconomic level. Therefore, BI issued a regulation requiring certain companies to invest in hedging funds.