Bank Indonesia: Prudent Management Keeps Foreign Debt Under Control
JAKARTA, RAKYAT NEWS— – Bank Indonesia (BI) has reported that Indonesia’s foreign debt (ULN) stood at $407.3 billion in May 2024, indicating that the country’s foreign debt remains manageable.
The ULN grew by 1.8 percent year-on-year (yoy), rebounding from a 1.5 percent contraction in April 2024. This growth is attributed to both the public sector, including the government and central bank, and the private sector.
“The development of this debt is sourced from the public sector, both government and central bank, as well as the private sector,” said Erwin Haryono, Executive Director of BI’s Communication Department in Jakarta.
Haryono highlighted that Indonesia’s foreign debt structure remains healthy, underpinned by prudent management practices. This is evident from the debt-to-GDP ratio, which stands at 29.8 percent, with long-term debt comprising 85.9 percent of the total foreign debt.
Government foreign debt in May 2024 was recorded at $191 billion, marking an annual contraction of 0.8 percent, following a 2.6 percent contraction in April 2024. This development is largely due to increased foreign capital inflows into both international and domestic government securities, reflecting positive investor sentiment towards Indonesia’s economic prospects.
“The government is committed to maintaining credibility by meeting debt principal and interest payments on time, managing foreign debt prudently, and seeking the most efficient and optimal financing,” added Haryono.
As a key component of the state budget financing instruments, foreign debt is directed towards productive and priority sectors. Notably, 21 percent of the government’s foreign debt supports healthcare and social services, 18.7 percent goes to government administration, defense, and mandatory social security, 16.8 percent to education, 13.6 percent to construction, and 9.5 percent to financial and insurance services.
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