During news of inflation and a heating up economy, there is still one encouraging news for Indonesia. Bank Indonesia (BI) reported that its external debt was at US$ 409.5 billion in April 2022. Assuming US$ 1 is equivalent to Rp. 14,729, the external debt value is Rp. 6,031.52 trillion.
The debt in April decreased compared to March which was recorded at US$ 412.1 billion (Rp 6,069.82 trillion). On an annual basis, the position of external debt in April 2022 contracted 2.2% (YoY), deeper than the contraction in the previous month of 1% (YoY).
The decline in external debt occurred due to a decline in government debt, while private debt actually increased.
Bank Indonesia in its official release explained, “The position of the Government’s external debts in April 2022 was recorded at 190.5 billion US dollars, down from the position of external debt in the previous month of 196.2 billion US dollars. Annually, the growth of Government external debt contracted by 7, 3% (YoY), deeper than the previous month’s contraction of 3.4% (YoY),”
The government’s repayment of debts worth US$ 1.9 billion was one of the reasons for the decline in external debt. Of the total payments, principal debt was recorded at US$ 1.576 billion and interest at US$ 374 million.
Payments of Government Securities (SBN) that are maturing dominate the payment of these debts. Based on data from BI, the value of SBN maturing in April was US$ 1.32 billion, with a principal of US$ 1.025 billion and an interest of US$ 295 million.
“The decline in Government external debt occurred due to several series of Government Securities (SBN) maturing in April 2022 and a shift in the placement of funds by non-resident investors in line with the high uncertainty in global financial markets,” said BI.
The shift in the placement of funds by non-resident investors or foreign investors can be seen in the declining foreign ownership in the SBN market.
Based on data from the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance, at the end of April, foreign investor ownership in the SBN market was recorded at Rp. 827.85 trillion, a decrease of around Rp. 20.4 trillion or around US$ 1.4 billion.
Furthermore, the portion of foreign investors in the SBN market is decreasing. At the end of April, the portion was 17.03% and the latest data shows that the share is now down by another 16.76% as of June 14.
The decline in the foreign share in the government bonds market is inseparable from the skyrocketing yield of US government bonds. The narrowing yield difference made foreign investors release SBN and return to the United States.