Indonesia's Foreign Debt Growth Slowed on Global Uncertainty
Total outstanding foreign debt of Indonesia fell to USD $302.4 billion at the end of the third quarter of 2015, down USD $2.1 billion from the end of the preceding quarter. The central bank of Indonesia (Bank Indonesia) said both public and private external debt declined in Q3-2015 as both sectors were reluctant to take up new (overseas) debt amid global uncertainties, Indonesia's sluggish economic growth, and the fragile rupiah (ahead of looming capital outflows brought about by higher US interest rates).
However, on a year-on-year basis, Indonesia's external debt is still growing, albeit the growth pace is slowing. The country's foreign debt position at USD $302.4 billion at the end of September 2015 implies a 2.7 percent rise from the the same period last year. In the preceding month, August, the y/y growth pace was 4.4 percent, while in July the y/y growth pace was 6.3 percent. The slowing growth pace is the result of concern about global uncertainties and their impact on the rupiah. Currently, markets are bracing for a Fed Fund Rate hike in December 2015. This move is expected to cause enormous pressure on the rupiah, thus exacerbating the foreign debt position.
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia
Bank Indonesia data show that 55.6 percent of Indonesia's total foreign debt in Q3-2015 was borne by the private sector (USD $168.2 billion), while the remainder (USD $134.2 billion) was borne by the public sector. Most of Indonesia's total external debt, approximately 85.5 percent, constitutes long-term debt (due in more than a year), which means it poses less of a liquidity risk.
Outstanding foreign debt is expected to rise again in the fourth quarter of 2015 as the government will seek loans to finance its budget shortfall (brought about by weaker than expected tax collection so far this year). However, as government spending has also not been optimal, demand for foreign loans may not be too great in the last quarter of the year.
Bank Indonesia considers Indonesia's debt position safe with a debt-to-GDP ratio of 34.9 percent, and debt-to-export ratio of 157.6 percent. Indonesia's foreign exchange reserves stood at USD $101.7 billion in October 2015.
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|
|March||$132.8 billion||$165.3 billion||$298.1 billion|
|April||$132.9 billion||$167.2 billion||$300.1 billion|
|May||$133.5 billion||$168.7 billion||$302.3 billion|
|June||$134.6 billion||$169.7 billion||$304.3 billion|
|July||$134.5 billion||$169.2 billion||$303.7 billion|
|August||$134.0 billion||$169.3 billion||$303.2 billion|
|September||$134.2 billion||$168.2 billion||$302.4 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