Indonesia's external debt, at the end of May 2019, was recorded at US$386.1 billion, constituting government and central bank debt of $189.3 billion as well as private debt, including state-owned enterprises, amounting to $196.9 billion, according to a statement from Bank Indonesia (BI) here on Friday.
Indonesia’s external debt grew by 7.4 percent year-on-year (yoy), slowing from the previous month’s growth of 8.8 percent yoy, mainly due to net repayments on external debt and weakening of the Indonesian currency rupiah against the greenback resulting in a less significant amount of rupiah debt in terms of the US dollar.
The slowdown of total external debt growth originated from private external debt in the midst of continued dismal growth in the government external debt.
The government external debt growth remained low. The outstanding of government external debt at May-end of 2019 reached $186.3 billion, recording an increasing growth of 3.9 percent yoy than 3.4 percent yoy in the previous month, driven by the issuance of global bonds.
In spite of the higher growth, the debt level plunged, from $186.7 billion at the end of April 2019. The decline was induced by a $0.5 billion fall from net repayments debt coupled with foreign ownership in the Domestic Government Securities (SBN) reducing by $1.5 billion, fuelled by rising uncertainties in the global financial markets as trade tensions spiraled.
The government's external debt management is prioritized to finance development, dominated in productive sectors to promote growth and improve public welfare, among others, the human health & social work activities sector, constituting 18.8 percent of the government external debt; the construction sector, 16.4 percent; education sector, 15.8 percent; public administration & defense sector, 15.1 percent; and financial & insurance sector, 14.3 percent.
Growth in private external debt slowed. Private external debt outstanding at the end of May 2019 grew 11.3 percent yoy, decreasing from the previous month's growth of 14.7 percent yoy, chiefly on account of declining debt in the financial and insurance sector.
At the end of the reporting period, private external debt was dominated by the financial & insurance sector; manufacturing sector; electricity, gas, & water supply sector; and mining & drilling sector, with the share to total private external debt reaching 75.2 percent.
The level of Indonesia's external debt remained healthy as was apparent from factors including Indonesia's external debt to Gross Domestic Product (GDP) ratio as of May-end 2019 that was relatively stable at 36.1 percent in comparison with conditions in the previous period.
Moreover, Indonesia's external debt structure continued to be dominated by long-term debt, accounting for 87.3 percent of the total external debt.
In order to maintain a healthy external debt structure, BI has closely coordinated with the government to continually monitor external debt by promoting the application of prudential principles in its management.
Furthermore, the role of external debt will be optimized in supporting development financing without incurring the risks that may affect macroeconomic stability.