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UOB Group’s Economist Enrico Tanuwidjaja and Haris Handy give their views on the latest external debt figures in Indonesia.

Key Quotes

“Indonesia’s external debt slowed in 1Q20, attributed by foreign capital retreats (notably in government securities) amidst risk aversion over COVID-19 pandemic, as well as payments of matured debt… The sectors with the largest share of external debt (as of March 2020), amounting to 60% of Indonesia’s total external debt include financial-and-insurance, manufacturing, electricity-gas-steam, human-health-and-social work, and, mining-and-drilling.”

“Government external debt fell by 3.6% y/y to USD181bn in 1Q20 (vs. 4Q19’s 9.1%) as foreign ownership in the government securities dropped by IDR145bn (USD9bn) during the period as investors flocked into safe-haven assets.”

“Meanwhile, private external debt slowed by 4.5% y/y to USD205.5bn vs. 4Q19’s 6.6%, due to decline of external debts in the non-financial institutions (1Q20’s -2.3% y/y vs. 4Q19’s 3.6%) and slower expansion of external debt in the financial institutions (1Q20’s 6.7% y/y vs. 4Q19’s 7.6%).”

“On the balance, Bank Indonesia deemed that overall external debt remain healthy, supported by the prudential principle application in its management. This is reflected in the ratio of Indonesia external debt to gross domestic product (GDP) at around 34.5% in 1Q20, down from 36.2% in the previous quarter. The debt structure remained dominated by long-term debt, accounting for 88.4% of the total external debt.”