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Jakarta Post

Indonesia’s foreign debt rises 10 percent on high govt borrowing

  • Marchio Irfan Gorbiano

    The Jakarta Post

Jakarta   /   Thu, August 15, 2019   /   03:16 pm
Indonesia’s foreign debt rises 10 percent on high govt borrowing An employee arranges packs of cash at Bank Mandiri's cash center at Plaza Mandiri, Jakarta. Indonesia's total foreign debt rose by 10.1 percent to US$391.8 billion year-on-year (yoy) in the second quarter. (Antara/Akbar Nugroho Gumay)

Indonesia’s external debt level was up about 10 percent year-on-year (yoy) in the second quarter due to a significant increase in government net borrowing.

According to data released by Bank Indonesia on Thursday, the country’s foreign debt, which includes borrowing by the government and the private sector, rose 10.1 percent yoy to US$391.8 billion in the second quarter of this year.

Despite the latest increase in external debt, the central bank still deems the overall level safe, as the foreign debt to gross domestic product (GDP) ratio was recorded at 36.8 percent, down from 36.92 percent in the previous quarter. About 87 percent of the current outstanding debt also had a long maturity period.

The growth in overall external debt exceeded the 8.1 percent yoy growth recorded in the previous quarter due to an increase in the government’s net debt, while change in the rupiah’s exchange rate also contributed to an increase of foreign debt value in rupiah, BI spokesman Onny Widjanarko said in a statement.

The government’s external debts, which also include those raised by the central bank, rose 9.1 percent yoy in the second quarter to $192.5 billion, almost three times the 3.6 percent yoy growth booked in the previous quarter.

Onny explained that the government debt was largely to raise funds for health care and social services, which accounted for 18.9 percent of total government debt, as well as for the construction sector, which had a 16.4 percent share of total government debt.

Private-sector debt, which also includes debt of state-owned enterprises (SOEs), grew 11.4 percent yoy to $196.3 billion in the second quarter, slowing down from a 13.3 percent yoy increase booked in the previous quarter, thanks to an increase in loan repayments by corporations.

The private-sector debt was largely concentrated in four sectors, namely financial services and insurance, manufacturing, electricity, gas and steam procurement as well as mining. Those sectors accounted for 76.9 percent share of the private sector external debt. (hen)