Jakarta – Bank Indonesia (BI) revealed on Friday that Indonesia's foreign debt reached US$383.3 billion in January a rise of 7.2 percent year-on-year (yoy) compared to January 2018, which was recorded at $357.6 billion.
BI regards the debt level as normal, marked by a higher growth in government borrowing rather than debt growth in the private sector.
"The foreign debt position increased by $5.5 billion compared to the position late last year," said BI in its report on Friday. In December, 2018, Indonesia's foreign debt was recorded at US$377.8 billion.
In January the combined debt of the government and BI stood at $190.2 billion, compared to the position in January, 2018, which was recorded at $187.2 billion. Meanwhile, the private sector debt in January this year was recorded at $193.1 billion.
"The increase in foreign debt was particularly triggered by the actions of foreign investors through the purchase of Indonesia's sovereign debt papers [SBN] in January. This indicates an improvement in foreign investor confidence in the Indonesian economy," BI said.
Previously, multinational investment bank and financial services company Morgan Stanley called on Indonesia to reduce its dependence on external funding to break the link between its monetary policy cycle and external liquidity conditions.
"Bank Indonesia's policy mandate of currency stability is likely due to the notion that Indonesia is a highly dollarized economy and currency volatility would have negative implications," It said in a research note, a copy of which was made available to The Jakarta Post on Thursday. (bbn)