Indonesia’s External Debt Remains Under Control in January 2023, Continuing Contraction Trend

rupiah and us dollar
rupiah and us dollar

According to a report from Bank Indonesia (BI), Indonesia’s external debt (ULN) remained under control in January 2023. The ULN position for Indonesia in January 2023 was $404.9 billion, which represents a contraction in growth of 1.9% compared to the previous year.

This contraction was driven by the government and private sector ULN, and was influenced by the weakening of the US dollar against global currencies.

Erwin Haryono, Executive Director of BI’s Communication Department, commented on the ULN contraction, stating that “the development of the ULN position in January 2023 was also influenced by factors of change due to the weakening of the US dollar against the majority of global currencies, including the Rupiah.”

BI noted that government ULN was still in a contraction phase, with the government’s ULN position recorded at $194.3 billion, representing a contraction of 2.5% compared to the previous year.

Erwin emphasized that the government is committed to managing Indonesia’s external debt carefully and maintaining credibility in fulfilling principal and interest payment obligations on time.

ULN plays a crucial role in supporting the Indonesian government’s efforts to finance productive sectors and priority spending, especially to maintain the country’s economic growth amidst the uncertainty of the global economy.

The ULN supports the health and social services sector, government administration, defense, and mandatory social security, education services, construction, and financial and insurance services.

Erwin also mentioned that private ULN continued to contract in January 2023, with a position of $201.2 billion, representing a contraction of 1.5% compared to the previous year.

The largest private ULN came from the financial and insurance services sector, manufacturing industry, procurement of electricity, gas, steam/hot water, and cold air, and mining and excavation.

Despite the contraction, the structure of Indonesia’s ULN remained healthy, and the ULN-to-Gross Domestic Product (GDP) ratio remained in the range of 30.3%, slightly higher than the ratio in the previous year.