Adrian Wail Akhlas, Jakarta – Indonesia's foreign debt growth accelerated in April, driven mainly by the government's issuance of sovereign debt papers (SBN) and global bonds to cover for the widening budget deficit to fund its COVID-19 fight, Bank Indonesia (BI) announced on Monday.
The external debt of Southeast Asia's biggest economy, which includes borrowing by the government and the private sector, was recorded at US$400.2 billion, with a growth rate of 2.9 percent year-on-year (yoy), according to BI data. It marks an increase in the annual growth rate from 0.5 percent yoy in March.
The government's foreign debt rose 1.6 percent yoy in April to $189.7 billion, driven by the weekly issuance of SBN, as well as the issuance of dollar-denominated bonds worth $4.3 billion issued in the United States to finance the budget deficit in 2020. Public sector debt, raised by the government and the central bank, amounted to $192.4 billion.
"The management of the government's external debt is conducted in a prudent and accountable manner to support government spending in priority sectors, focusing on COVID-19 handling and economic stimulus," the central bank said in a statement on Monday.
Indonesia's budget deficit is expected to widen to 6.34 percent of GDP to cover the Rp 677.2 trillion ($47.65 billion) in economic stimulus packages and additional healthcare spending to fight the impacts of the COVID-19 pandemic.
Private sector external debt, which includes the debt of state-owned enterprises, grew 4.2 percent to $207.8 billion in April, slower than the 4.7 percent growth recorded in March.
"The development is due to the deeper contraction of external debts in financial institutions amid the stability of the external debt of non-financial institutions," BI said.
Private sector external debt is largely disbursed across four sectors, namely mining, manufacturing, financial services and insurance and electricity, gas and steam procurement. The sectors accounted for 77.4 percent of private sector external debt.
The central bank deemed the overall external debt level as healthy as the foreign-debt-to-GDP ratio was recorded at 36.5 percent by the end of April, up from 34.6 percent the previous month. Long-term loans account for 88.9 percent of the current outstanding debt.