Moh Khory Alfarizi, Jakarta – The Finance Ministry in the February edition of the State Budget report revealed that the government's foreign debt as of January 2023 reached Rp7,754.98 trillion – a slight increase to December 2022 that amounted to Rp7,733.99 trillion – and a gross domestic product (GDP) ratio of 38.56 percent.
However, the strengthening rupiah's value from December to January against various foreign currencies (USD, EUR, JPY) has contributed to reducing the government's debt position in foreign currencies.
"The government constantly manages debt prudently with controlled risks through an optimal composition, both in terms of currency, interest rates, and maturity," the report states.
The report states that based on currency, rupiah-denominated government debt dominated with a proportion of 71.45 percent. This is in line with the general policy of debt financing, namely optimizing domestic financing sources and utilizing foreign debt as a compliment.
This policy was carried out in coordination with Bank Indonesia in order to deal with the volatility of the rupiah exchange rate against foreign currencies and its impact on the payment of foreign debt obligations.
"To help better manage exchange rate risks," the Ministry of Finance noted.
The Finance Ministry also noted that the composition of the majority of government debt was in the form of SBN instruments which reached 88.90 percent. A deep, active, and liquid SBN market will support increased debt management efficiency in the long term.