Indonesia's external debt was managed with a healthy structure at the end of Q3/2019. The external debt was recorded at USD395.6 billion at the end of Q3/2019, consisted of public debt (government and central bank) of USD197.1 billion, as well as private debt (including state-owned enterprises) amounted to USD198.5 billion. Indonesia’s external debt grew 10.2% (yoy), relatively stable compared with the previous quarter, which was influenced by higher growth of government debt amid lower growth of private debt.
The rise in government external debt was in line with investor confidence in the national economic outlook. In the Q3/2019, government external debt position was recorded at USD194.4 billion or grew 10.3% (yoy), up from 9.1% (yoy) in the previous quarter. Significant non-resident net capital inflows in domestic government securities (SBN) during the Q3/2019 has induced a higher position of external debt. Such conditions reflected the investors’ positive perception regarding domestic economic outlook despite a widespread global uncertainty, together with attractive yields on domestic financial assets. Government external debt management is prioritized to finance development. The largest portion of financing is directed towards productive sectors that promoting growth and improving public welfare, among others, human health & social work activities sector (19.0% of government external debt), construction sector (16.5%), education sector (16.0%), public administration, defense & compulsory social security sector (15.3%), and financial & insurance sector (13.7%).
Growth of private external debt slowed from the previous quarter. At the end of Q3/2019, private external debt growth declined to 10,4% (yoy) from 11.3% (yoy) in the last quarter, stemmed primarily from the declining position of banks’ external debt. Private external debt was dominated by the financial & insurance sector, manufacturing sector, electricity, gas, & water supply sector, and mining & drilling sector whose share amounted to 75,4% to total private external debt.
Indonesia's external debt maintained a healthy structure supported by the prudential principle application in its management. The condition was reflected in, among others, improvement of Indonesia's external debt to Gross Domestic Product (GDP) ratio in the Q3/2019 at 36.3%. Moreover, Indonesia's external debt structure remained dominated by long-term debt, accounted for 88.1% of the total external debt. Bank Indonesia, in close coordination with the Government, continues to monitor external debt by promoting the prudential principle application in its management to maintain a solid external debt structure. Furthermore, external debt's role will also be optimized in supporting development financing without incurring the risks which may affect macroeconomic stability.
