According to Bank Indonesia (BI), Indonesia’s foreign exchange reserve at the end of April 2023 remained high at $144.2 billion, albeit lower than the previous month’s position, due to the government’s foreign debt repayment.
Erwin Haryono, Executive Director and Head of the Communications Department at BI, stated that the slight decrease in foreign exchange reserves was mainly due to the need for foreign debt repayment and forex liquidity needs in line with national religious holidays.
Erwin stated that the foreign exchange reserves position is equivalent to financing for 6.4 months of imports or 6.3 months of imports and foreign debt repayments, and above the international sufficiency standard of around 3 months of imports.
He also noted that the foreign exchange reserve can support the external sector’s resilience and maintain macroeconomic and financial system stability.
BI believes that the foreign exchange reserves will remain adequate, supported by sustained economic stability and prospects and various policy responses to maintain macroeconomic and financial system stability to support national economic recovery.
Meanwhile, as previously reported, Indonesia’s foreign debt position at the end of February 2023 was $400.1 billion, down from January 2023’s position of $404.6 billion, mainly due to the decrease in public sector foreign debt (Government and Central Bank) and private sector foreign debt. The year-on-year contraction in foreign debt position in February 2023 was 3.7%, deeper than the 2.0% contraction in the previous month.
The utilization of foreign debt is directed towards supporting the Government’s efforts in financing productive sectors and priority spending, particularly to maintain and support Indonesia’s economic growth amid global economic uncertainties.
The support includes the health and social services sector (24.0% of total Government foreign debt), government administration, defense, and mandatory social security (17.8%), education services (16.7%), construction (14.2%), and financial and insurance services (10.4%).
The Government’s foreign debt position is relatively safe and controlled, given that almost all of it has a long-term tenor, accounting for 99.9% of the total Government foreign debt.
The high foreign exchange reserves position indicates the strength and resilience of the Indonesian economy against external shocks and uncertainties.
It also shows that the Government’s prudent policies and efforts to manage its foreign debt have paid off in maintaining economic stability and growth prospects. With sustained economic stability and policy responses, Indonesia can continue to strengthen its economic resilience and maintain a solid economic growth trajectory.
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