Indonesia’s external debt grew 10.3% (yoy), above the 8.1% (yoy) posted in the previous month, mainly due to a net withdrawal of external debt and the strengthening of rupiah against US dollar hence resulting a more substantial amount of rupiah debt in terms of US dollar.
"The rising of total external debt stemmed from government and private external debt," Bank Indonesia (BI) said in a press statement released on Monday, September 16, 2019.
"The rise in government external debt was in line with investor positive perception regarding Indonesia’s economy," it remarked.
Government external debt rose 9.7% (yoy) to USD194.5 billion, higher than 9.1% (yoy) in the earlier period. An influx of foreign capital inflows to the domestic government securities (SBN) market remained strong despite adverse global economic dynamics. Such developments reflect the investor confidence in the national economy and supported by attractive returns of portfolio investment in a domestic financial asset.
Government external debt management was prioritized to finance development, dominated in productive sectors to promote growth as well as improving public welfare, among others, human health & social work activities sector (19.0% of government external debt), construction sector (16.4%), education sector (16.0%), public administration & defense sector (15.2%), and financial & insurance sector (13.9%).
Private external debt outstanding at the end of July 2019 grew 11.5% (yoy), up from the previous month growth of 11.1% (yoy). The increase was predominantly stemmed from global bonds issuance by nonfinancial corporations. Private external debt was dominated by the financial & insurance sector, manufacturing sector, electricity, gas, & water supply sector, and mining & drilling sector. External debt’s share in these four sectors to total private external debt reached 76,6%.
Indonesia's external debt maintained a healthy structure supported by the prudential principle application in its management. The condition was reflected in, among others, Indonesia's external debt to Gross Domestic Product (GDP) ratio at the end of July 2019 at 36.2%, down from the previous month. In addition, Indonesia's external debt structure remained dominated by long-term debt, accounted for 87.6% of the total external debt.
"Bank Indonesia, in close coordination with the Government continues to monitor external debt by promoting the prudential principle application in its management to maintain a healthy external debt structure," the central bank added.
"Furthermore, external debt's role will also be optimized in supporting development financing without incurring the risks which may affect macroeconomic stability," it noted.