External debt of Indonesia grew at a pace of 10.7 percent year-on-year (y/y) in October 2014, slightly slower than the 11.2 percentage point (y/y) growth pace in the previous month, according to a statement of Indonesia’s central bank (Bank Indonesia). Total outstanding external debt of Indonesia reached USD $294.5 billion in October (from USD $292.3 billion in the previous month). While growth of public sector external debt slowed in October, private sector external debt accelerated.
Public sector external debt slowed to 5.9 percent (y/y) in October from 7.9 percent (y/y) in September. Most of this debt (53.5 percent) is in the form of debt securities (bonds). Meanwhile, private sector external debt accelerated to 15.1 percent (y/y) in October from 14.1 percent (y/y) in the previous month. Most of this debt is in the form of overseas loans. Private sector foreign debt grew particularly in the financial, manufacturing, mining, and electricity, gas & water supply sectors.
Most of Indonesia’s foreign debt (about 83.4 percent of total external debt) constitutes long-term debt, particularly public sector debt is mostly (96.9 percent) long-term debt. As Indonesia’s private sector external debt is for 72.3 percent long-term debt, this debt is more vulnerable to exchange rate volatility. Therefore, Bank Indonesia announced in late October to force local non-bank corporations that hold external (foreign-denominated) debt to hedge their foreign exchange holdings against the Indonesian rupiah with a ratio of 20 percent in the period 1 January 2015 to 31 December 2015. The central bank implemented this rule after private sector debt had increased three-fold between end-2005 and August 2014, jeopardizing macroeconomic stability of Indonesia.
Indonesia Foreign Debt October 2014:
|Public Debt||USD $133.2 billion|
|Private Debt||USD $161.3 billion|
|Total Debt||USD $294.5 billion|
Source: Bank Indonesia