Indonesia's External Debt Rises To US$444.4 Bln In May

By Nik Nurfaqih Nik Wil

JAKARTA, July 15 (Bernama) -- Indonesia's external debt rose to US$444.4 billion in May, with annual growth accelerating slightly to 2.1 per cent year-on-year (y-o-y) from 2.0 per cent in April, supported by continued expansion in public sector borrowing.

Bank Indonesia’s (BI) Communication Department executive director, Ramdan Denny Prakoso, said the country's debt structure remained sound, supported by prudent management, as reflected in the debt-to-gross domestic product (GDP) ratio of 29.9 per cent, while long-term debt accounted for 83.9 per cent of the total.

“The development was influenced by continued growth in public external debt, comprising the government and central bank, amid a shallower contraction in private external debt,” he said in a statement on Wednesday.

Ramdan said government external debt stood at US$217.3 billion in May, with an annual growth of 3.7 per cent y-o-y, relatively stable from April.

He said the growth was mainly due to inflows into international government securities (SBN), reflecting investor confidence in Indonesia's economic outlook amid net repayments of maturing government foreign loans.

“The government remains committed to maintaining credibility by fulfilling principal and interest payment obligations on time, while managing external debt prudently, measurably and flexibly to achieve efficient and optimal financing,” he said.

Ramdan said government external debt continued to finance productive sectors, primarily health and social activities (22.0 per cent), public administration, defence and compulsory social security (20.6 per cent), education (16.2 per cent), construction (11.5 per cent), as well as transportation and storage (8.5 per cent).

He said nearly all government external debt had a long-term maturity profile, while the increase in BI’s external debt was driven by higher non-resident holdings of monetary instruments, namely BI Rupiah Securities, in line with the central bank's pro-market monetary operations and efforts to maintain rupiah exchange rate stability.

Private external debt stood at US$195.9 billion in May, with its annual contraction narrowing to 0.1 per cent y-o-y from 0.5 per cent in April, mainly attributable to external debt at financial corporations, which recorded an annual contraction of 0.8 per cent y-o-y.

He said the main contributors to private external debt were the manufacturing industry, financial and insurance activities, electricity and gas supply, as well as mining and quarrying, which together accounted for 79.9 per cent of total private external debt, while long-term maturities represented 74.9 per cent of the total.

Ramdan said BI and the government would continue strengthening coordination to monitor external debt developments while optimising the role of external debt in supporting development financing and sustainable national economic growth, while minimising risks to economic stability.

-- BERNAMA