On Friday (17/04) Indonesia’s central bank (Bank Indonesia) announced that the country’s foreign debt grew 9.4 percent (y/y) to USD $298.9 billion in February 2015, thus slower than the 10.5 percent (y/y) growth rate in the preceding month. Indonesia’s external debt growth slowed as both public and private sectors refrained from taking more debt. Public sector foreign debt grew 4.4 percent (y/y) to USD 134.8 billion, while private sector foreign debt rose 13.8 percent (y/y) to USD $164.1 billion in February.
About 85 percent of Indonesia’s total foreign debt is long-term debt and therefore there is no cause for concern about liquidity pressure for the near future. However, Bank Indonesia stated that it continues to monitor private sector external debt carefully as about 14.7 percent of total foreign debt (mainly private sector debt) is short-term debt. Earlier, the central bank of Southeast Asia’s largest economy had expressed its concern about a large chunk of private debt being unhedged, making private companies vulnerable to rupiah volatility. This year so far (up to 17 April 2015), the rupiah has depreciated 3.4 percent against the US dollar. Indonesia’s currency is expected to depreciate further as the world is slowly preparing for higher US interest rates.
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia
Bank Indonesia mentioned that private sector foreign debt is mainly concentrated in the financial, manufacturing, mining and electricity, gas and water supply sectors. In general, the institution labels the country’s foreign debt situation ‘healthy’.
Recently, international credit rating agency Standard & Poor’s (S&P) stated that Indonesian companies’ debt grew 240 percent in the period 2003-2013. However, as this debt growth is in line with companies’ capital expenditure as well as earnings growth, S&P considers Indonesia’s credit profile “most balanced” (in comparison to China and India).
Indonesia's Foreign Debt - 2015:
|2015|| Public Debt
||Private Debt||Total Debt|
|January||$135.7 billion||$162.9 billion||$298.6 billion|
|February||$134.8 billion||$164.1 billion||$298.9 billion|
Indonesia's Foreign Debt - 2014:
|2014|| Public Debt
||Private Debt||Total Debt|
|January||$127.9 billion||$141.4 billion||$269.3 billion|
|February||$129.0 billion||$143.1 billion||$272.1 billion|
|March||$130.5 billion||$146.0 billion||$276.5 billion|
|April||$131.0 billion||$145.6 billion||$276.6 billion|
|May||$132.2 billion||$151.5 billion||$283.7 billion|
|June||$131.7 billion||$153.2 billion||$284.9 billion|
|July||$134.2 billion||$156.4 billion||$290.6 billion|
|August||$134.2 billion||$156.2 billion||$290.4 billion|
|September||$132.9 billion||$159.3 billion||$292.3 billion|
|October||$133.2 billion||$161.3 billion||$294.5 billion|
|November||$133.9 billion||$160.5 billion||$294.4 billion|
|December||$129.7 billion||$162.8 billion||$292.6 billion|
Source: Bank Indonesia