Indonesia’s foreign debt recorded a downward trend in Q4 2024 as Bank Indonesia (BI) reports that Indonesia’s foreign debt reached USD 424.8 billion, lower than the previous quarter’s USD 428.1 billion, slowing to 4.0 percent year-on-year (yoy) in Q4/ 2024, down from 8.3 percent yoy in the third quarter, according to reporting from Tempo.
Executive Director of BI’s Communications Department, Ramdan Denny Prakoso, said that this decline was caused by the rupiah’s weakening due to the strengthening of the US dollar and adjustments in public and private sector debts, adding that despite the decrease in foreign debt, the debt structure remains controlled and dominated by long-term tenors.
He also said that the government’s foreign debt position was USD 203.1 billion, down from USD 204.1 billion.
“Annually, the growth slowed to 3.3 percent (yoy) from 8.4 percent (yoy) in the third quarter. The main factor for this decrease is the decline in the government bond position due to the appreciation of the US dollar,” said Ramdan in an official statement on Monday (17/2/25.)
Nevertheless, foreign capital inflows in the State Bonds (SBN) still recorded a net inflow, indicating investors’ confidence in Indonesia’s economy. The government reaffirmed its commitment to fulfill debt payment obligations in a timely manner and to manage foreign debt prudently, measurably, and flexibly, says Tempo.
Ramdan said the government’s foreign debt is focused on financing productive sectors. Most of it is used for Health and Social Activities (20.8 percent), Government Administration and Social Security (19.7 percent), and Education Services (16.7 percent).
Tempo reports that in the private sector, the position of external debt also experienced a decrease to USD 194.1 billion, lower than the previous quarter at USD 196.3 billion. Annually, private external debt experienced a deeper contraction, namely -2.2 percent (yoy) compared to -0.6 percent (yoy) in the previous quarter.
Two main sectors, namely financial institutions and non-financial corporations, both recorded declines of 2.5 percent (yoy) and 2.1 percent (yoy), respectively.
Private external debt is still dominated by the Manufacturing Industry, Financial Services, Electricity and Gas Supply, and Mining and Quarrying sectors, which cover 79.5 percent of total private external debt. The majority of this debt also has a long-term term with a share of 76.7 percent, says Tempo, adding that BI ensures that Indonesia’s foreign debt structure remains healthy by applying prudential principles. The ratio of foreign debt to Gross Domestic Product (GDP) dropped to 30.4 percent, from 31.1 percent in the third quarter of 2024.
In addition, long-term debts still dominate, with a share of 84.8 percent of total foreign debt.
Bank Indonesia and the government are committed to maintaining the stability of foreign debt within safe limits. “Coordination is continually strengthened to monitor the development of foreign debt, minimize risks, and ensure that debt continues to support national economic growth,” said Ramdan.
Moving forward, prudent management of foreign debt will be crucial in preserving economic stability, particularly in the face of global financial market fluctuations and pressures on the rupiah’s exchange rate.
Source: Tempo
Stock photo by Alex P on Pexels
