TEMPO.CO, Jakarta - Indonesia's foreign debt recorded a downward trend in the fourth quarter of 2024. Bank Indonesia reports that Indonesia's foreign debt reaches US$424.8 billion, lower than the previous quarter's US$428.1 billion.

Foreign debt growth slowed to 4.0 percent year-on-year (yoy) in the fourth quarter of 2024, down from 8.3 percent yoy in the third quarter.

According to Ramdan Denny Prakoso, Executive Director of BI's Communications Department, this decline was caused by the rupiah's weakening due to the strengthening of the US dollar and adjustments in public and private sector debts.

Ramdan stated that despite the decrease in foreign debt, the debt structure remains controlled and dominated by long-term tenors.

He also conveyed that the government's foreign debt position was US$203.1 billion, down from US$204.1 billion.

"Annually, the growth slowed to 3.3 percent (yoy) from 8.4 percent (yoy) in the third quarter. The main factor for this decrease is the decline in the government bond position due to the appreciation of the US dollar," said Ramdan in an official statement on Monday, February 17, 2025.

Nevertheless, foreign capital inflows in the State Bonds (SBN) still recorded a net inflow, indicating investors' confidence in Indonesia's economy. The government reaffirmed its commitment to fulfill debt payment obligations in a timely manner and to manage foreign debt prudently, measurably, and flexibly.

The government's foreign debt, said Ramdan, is focused on financing productive sectors. Most of it is used for Health and Social Activities (20.8 percent), Government Administration and Social Security (19.7 percent), and Education Services (16.7 percent).

In the private sector, the position of external debt also experienced a decrease to US$194.1 billion, lower than the previous quarter at US$196.3 billion. Annually, private external debt experienced a deeper contraction, namely -2.2 percent (yoy) compared to -0.6 percent (yoy) in the previous quarter.

Two main sectors, namely financial institutions and non-financial corporations, both recorded declines of 2.5 percent (yoy) and 2.1 percent (yoy), respectively.

Private external debt is still dominated by the Manufacturing Industry, Financial Services, Electricity and Gas Supply, and Mining and Quarrying sectors, which cover 79.5 percent of total private external debt. The majority of this debt also has a long-term term with a share of 76.7 percent.

Bank Indonesia ensures that Indonesia's foreign debt structure remains healthy by applying prudential principles. The ratio of foreign debt to Gross Domestic Product (GDP) dropped to 30.4 percent, from 31.1 percent in the third quarter of 2024.

In addition, long-term debts still dominate with a share of 84.8 percent of total foreign debt.

Bank Indonesia and the government are committed to maintaining the stability of foreign debt within safe limits. "Coordination is continually strengthened to monitor the development of foreign debt, minimize risks, and ensure that debt continues to support national economic growth," said Ramdan.

Moving forward, prudent management of foreign debt will be crucial in preserving economic stability, particularly in the face of global financial market fluctuations and pressures on the rupiah's exchange rate.

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