Chief Executive Director of the Communications Department of BI Erwin Haryono, in an official statement here, Monday, said that on an annual basis, the position of external debt in the second quarter of 2022 contracted 3.4 percent as compared to the corresponding period in the previous year (year-on-year/yoy), deeper as compared to the contraction of 0.9 percent (yoy) in the previous quarter.
The government's external debt position in the second quarter of 2022 amounted to US$187.3 billion, down from the external debt position of US$196.2 billion in the previous quarter. On an annual basis, the government's external debt contracted by 8.6 percent (yoy), deeper than the contraction of 3.4 percent (yoy) in the previous quarter.
The decline in the government's external debt position was partly due to the repayment of bilateral, commercial, and multilateral loans maturing during the period from April to June 2022. The repayment of maturing domestic Government Securities (SBN) also contributed to the decline in government external debt in the quarter.
In addition, he explained that volatility in the global financial markets that tended to be high also affected the shift of investment of domestic SBN to other instruments, thereby reducing the share of non-resident investors' ownership in domestic SBN.
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Withdrawal of external debt in the second quarter of 2022 is still prioritized to support government priority spending, including the handling of COVID-19 and the National Economic Recovery (PEN) Program. The government is committed to maintaining credibility by fulfilling obligations to pay principal and interest on debt in a timely manner as well as managing external debt in a prudent, credible, and accountable manner.
Haryono explained that the government's external debt support in meeting priority spending needs in the second quarter of 2022 includes the health services sector and social activities, 24.6 percent of the total government external debt; the education services sector, 16.6 percent; and the government administration sector, defense, and mandatory social security, 15.1 percent.
This is followed by the construction sector, at 14.2 percent, as well as the financial services and insurance sector, 11.7 percent. The position of government external debt is relatively safe and under control on account of the fact that almost all external debt had a long-term tenor, with a share of 99.7 percent of the total government external debt.
This development was caused by the external debt of financial institutions that contracted 0.2 percent (yoy), lower than minus five percent (yoy) in the previous quarter. The external debt of non-financial institutions/companies also contracted by 1.3 percent (yoy), deeper than the contraction in the previous quarter of 0.5 percent (yoy).
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By sector, the largest private external debt came from the financial and insurance services sector, the electricity, gas, steam/hot water and cold air supply sector, the mining and quarrying sector, and the manufacturing industry sector, with a share of 77.3 percent of the total private external debt. This external debt continued to be dominated by long-term external debt, with a share of 74.5 percent of the total private external debt.
Overall, he explained that Indonesia's external debt in the second quarter of 2022 remained under control, as reflected in the ratio of Indonesia's external debt to the gross domestic product (GDP) that was maintained at around 31.8 percent, down from the ratio in the previous quarter of 33.8 percent.
In addition, Indonesia's external debt structure remains healthy, as indicated by the dominance of long-term external debt, with a share of 86.7 percent of the total external debt. In order to maintain a healthy external debt structure, BI and the government continue to strengthen coordination in monitoring the development of external debt, supported by the application of prudential principles in their management.
The role of external debt will also continue to be optimized in supporting development financing and promoting national economic recovery by minimizing risks that may affect economic stability.
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Translator: Agatha O, Azis Kurmala
Editor: Fardah Assegaf
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