Indonesia’s Foreign Debt Climbs to $444.4 Billion as Government Borrowing Accelerates

JAKARTA, Investortrust.id — Indonesia's external debt climbed to $444.4 billion in May, adding $4.6 billion in just one month as the government and Bank Indonesia, the country's central bank, increased overseas borrowing while investor demand for Indonesian debt remained resilient.

The stock of foreign debt, equivalent to roughly Rp7,999 trillion ($503.1 billion) using the government's reference exchange rate, expanded 2.1% year over year, according to data released by Bank Indonesia on Wednesday.

Indonesia remains one of Southeast Asia's most closely watched emerging markets, and foreign debt trends are a key indicator of fiscal sustainability and investor confidence.

The latest figures suggest international investors continue to support Indonesian sovereign debt despite global market uncertainty, while the government's relatively low debt burden compared with many peers provides room to finance economic growth and infrastructure.

Government external debt rose to $217.3 billion in May, up from $216.4 billion a month earlier and growing 3.7% from a year ago.

Bank Indonesia said the increase reflected continued capital inflows into Indonesia's internationally issued government securities, demonstrating that investor confidence in Southeast Asia's largest economy remains intact despite scheduled repayments of maturing foreign loans.

Government Channels Borrowing Into Growth

The central bank said nearly all government external debt carries long-term maturities, reducing refinancing risks.

Borrowed funds continue to support productive sectors of the economy rather than short-term spending.

Healthcare and social services account for 22% of government external debt utilization, followed by public administration, defense and social security at 20.6%, education at 16.2%, construction at 11.5%, and transportation and warehousing at 8.5%.

"Nearly all of the government's external debt consists of long-term obligations," Bank Indonesia said in its monthly report.

Central Bank Borrowing Also Increased

Bank Indonesia's own external debt rose to $31.15 billion, expanding 5.45% from a year earlier.

The increase was largely driven by higher foreign investor holdings of Bank Indonesia Rupiah Securities (SRBI), a monetary instrument introduced to strengthen the central bank's market-based liquidity operations while supporting rupiah stability.

The central bank has increasingly relied on SRBI as part of its pro-market monetary strategy to attract foreign capital without disrupting domestic liquidity conditions.

Private Sector Debt Still Shrinks

Private-sector external debt continued to contract, although the pace of decline slowed considerably.

Outstanding private foreign debt stood at $195.9 billion in May, down 0.1% from a year earlier after falling 0.5% in April.

The improvement was mainly driven by financial institutions, whose foreign borrowing contracted by just 0.8%, a significant recovery from the 5.0% decline recorded a month earlier.

Indonesia's manufacturing sector, financial services industry, electricity and gas utilities, and mining companies together account for 79.9% of all private external debt.

Bank Indonesia noted that 74.9% of private-sector foreign debt also consists of long-term obligations.

Debt Profile Remains Healthy

Despite the monthly increase, Bank Indonesia maintained that Indonesia's external debt remains well within prudent limits.

The country's external debt-to-GDP ratio stood at 29.9% in May, while 83.9% of total external debt carries long-term maturities.

The central bank said the structure reflects Indonesia's cautious debt management strategy and supports the country's long-term macroeconomic stability.