Jakarta, CNBC Indonesia – Indonesia’s External Debt (ULN) in the third quarter of 2023 decreased compared to the previous quarter. Indonesia’s external debt position at the end of the third quarter of 2023 was recorded at US$ 393.7 billion, down compared to the external debt position at the end of the second quarter of 2023 which reached US$ 396.5 billion.
The decline in the external debt position mainly came from public sector external debt. With these developments, Indonesia’s external debt experienced an annual growth contraction of 0.1% (yoy), continuing the contraction in the previous quarter of 1.2% (yoy).
Government external debt decreased compared to last quarter. The government’s external debt position at the end of the third quarter of 2023 was recorded at US$ 188.3 billion, down compared to the previous quarter’s position of US$ 192.5 billion, or an annual growth of 3.3% (yoy).
“The decline in the government’s external debt position was influenced by the shift in the placement of non-resident investors’ funds in the domestic Government Securities (SBN) market to other instruments in line with increasing volatility in global financial markets,” said BI Communications Director Erwin Haryono, Wednesday (15/11/2023) .
Apart from that, Erwin said the government is committed to maintaining credibility by fulfilling obligations to pay principal and interest on debt on time, as well as managing external debt carefully, efficiently and accountably.
“As a component of the APBN financing instrument, the use of ULN continues to be directed to focus on supporting the Government’s efforts in financing the productive sector and priority spending, so that it is able to support and maintain solid economic growth in Indonesia amidst increasing uncertainty in global economic conditions,” explained Erwin.
This support includes, among others, the health services and social activities sectors (23.9% of total government external debt), government administration, defense and mandatory social security (18.3%), educational services (16.7%), construction (14 .2%), as well as financial and insurance services (10.1%). The position of government external debt is relatively safe and under control considering that almost all external debt has long-term tenors with a share reaching 99.9% of the total government external debt.
BI also noted that private external debt remains under control and continues to contract growth. The position of private external debt at the end of the third quarter of 2023 was recorded at 196.0 billion US dollars, higher than the position in the previous quarter of 194.6 billion US dollars. On an annual basis, private external debt experienced another growth contraction of 3.8% (yoy), continuing the contraction in the second quarter of 2023 of 5.3% (yoy).
The contraction in external debt growth came from financial institutions (financial corporations) and non-financial corporations, which each experienced contractions of 3.5% (yoy) and 3.9% (yoy).
Based on economic sector, the largest private external debt comes from the processing industry sector; financial and insurance services; supply of electricity, gas, steam/hot water, and cold air; as well as mining and quarrying, with a share reaching 78.4% of total private external debt. Private external debt also remains dominated by long-term external debt with a share reaching 75.7% of total private external debt.
Indonesia’s external debt structure remains healthy, supported by the application of the precautionary principle in its management. Indonesia’s external debt in the third quarter of 2023 remained under control as reflected in the ratio of Indonesia’s external debt to Gross Domestic Product (GDP), which fell to 28.9%, from 29.3% in the previous quarter, and was dominated by long-term external debt with a share reaching 87. 6% of total external debt.
In order to ensure that the external debt structure remains healthy, Bank Indonesia and the Government continue to strengthen coordination in monitoring the development of external debt, supported by the application of the precautionary principle in its management.
“The role of external debt will also continue to be optimized in supporting development financing and encouraging sustainable national economic growth, by minimizing risks that could affect economic stability,” said Erwin.
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