The World Bank reports that Indonesia' debt position is in the 7th position from a low-middle income around the globe, with a total debt of US$402.08 billion - Photo: Special

JAKARTA (TheInsiderStories) – The World Bank reports that Indonesia’ debt position is in the 7th position from a low-middle income around the globe, with a total debt of US$402.08 billion. The country’ rank is below Turkey, which is in 6th position with total debt of $440.78 billion, and Argentina worth of $279.30 billion.

Based on the report, in 2015, Indonesia’ debt was $307.74 billion, in 2016 $318.94 billion, in 2017 worth of $353.56 billion, and in 2018 stood at $379.58 billion. When compared to 2019′ amount there was an increase of 5.9 percent.

Bank Indonesia (BI) just reported the external debt the Southeast Asia largest economy’ debt at the end of August was recorded at $413.4 billion or rose 5.7 percent compared to last year (YoY), consisting of government and central Bank of $203.0 billion and private sector external debt (including SOEs) of $210.4 billion.

Indonesia’ increasing debt due to net withdrawal of external debt transactions, both public and private external debt. In addition, the strengthening of the Rupiah against the US Dollar also contributed to the increase in the value of local currency denominated external debt.

The position of Government external debt at the end of August was recorded at $200.1 billion or grew by 3.4 percent (YoY), higher than the growth in July of 2.3 percent. This development is mainly driven by the withdrawal of part of the loan commitment from multilateral institutions that provide support to Indonesia to deal with the COVID-19 pandemic and the National Economic Recovery Program.

While, private external debt in August was rose 7.9 percent (YoY) and increase 6.2 percent from July. This development was influenced by the growth in external debt of non-financial institution companies and financial institutions by 10.3 percent and 0.4 percent (YoY), respectively. Most of the withdrawal of private external debt in August was used to finance corporate investment activities.

Some of the sectors with the largest share of external debt, reaching 77.5 percent of total private external debt, are the financial services and insurance sector, the electricity, gas, steam or hot and cold air procurement sector, the mining and quarrying sector, and the industrial sector processing. In total, said BI, the ratio of Indonesia’ external debt to Gross Domestic Product at the end of August was 38.5 percent, relatively stable compared to the ratio in the previous month of 38.2 percent.

In addition, said the central bank, the structure of Indonesia’ external debt remains dominated by long-term external debt with a share of 89.0 percent of total external debt. In order to maintain a healthy external debt structure, Bank Indonesia and the Government continued to improve coordination in monitoring the development of external debt, supported by the application of prudential principles in its management.

Recently, the International Monetary Fund (IMF) reminded Indonesia to manage the debt prudently to prevent the excessive external imbalances as a result of the pandemic. In a report titled External Sector Report, states that a country like Indonesia, whenever possible, manages public debt carefully. In this case, the Fund suggested that policies should be continued to address domestic imbalances to prevent excessive external imbalances.

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