Indonesia Government Debt Reaches Rp 10,326.93 Trillion in Q3 as Ratio to GDP Eases to 40.3%

SABANG, Investortrust.id — Indonesia’s central government debt stock climbed to Rp 10,326.93 trillion as of Sept. 30, 2026, representing 40.3% of gross domestic product, according to the latest balance-sheet disclosures released by the Ministry of Finance.

The debt inventory highlights the fiscal tightrope facing state budget managers, who are balancing infrastructure outlays and social programs with borrowing costs amid elevated global volatility. While nominal debt continues to rise, accelerating domestic economic output has outpaced loan growth, allowing key sovereign leverage metrics to soften heading into the final quarter of the year.

The third-quarter debt portfolio comprises government securities (SBN) totaling Rp 8,962.4 trillion, alongside bilateral and multilateral loans amounting to Rp 1,364.53 trillion.

The outstanding balance marked an increase from the Rp 10,293.69 trillion recorded at the close of the first half of 2026. However, Suminto, Director General of Financing and Risk Management (DJPPR) at the Ministry of Finance, noted that the debt-to-GDP ratio actually narrowed to 40.30% in September, down from 41.26% in June 2026.

“This aligns with prudence in debt management, a measured strategy, and strong economic growth,” Suminto told Investortrust.id on Friday.

Suminto explained that an expanding nominal GDP base—underpinned by steady domestic activity and accelerated, targeted state budget spending—helped push the debt ratio lower.

“The government remains committed to maintaining the debt ratio at a controlled level while ensuring efficient state budget financing to support economic growth and fiscal sustainability,” he said.

Geopolitics and Market Governance Pressure Credit Risk

External financing pressures and international index developments continue to cast a shadow over local currency debt markets. Indonesia’s 5-year credit default swap (CDS), a key barometer of sovereign credit risk, stood at 102.74 basis points as of Wednesday, down 1.2% from earlier peaks.

Bank Danamon Chief Economist Irman Faiz stated that the run-up in the 5-year CDS was primarily driven by geopolitical crosscurrents, carrying greater systemic weight than announcements by index compiler Morgan Stanley Capital International (MSCI).

“The MSCI factor did indeed drive up the CDS, but there are other foundational factors behind that CDS, namely geopolitics,” Irman said during a press briefing on Thursday.

Faiz noted that if market uncertainties linked to index reviews linger into the second quarter of 2027, stabilizing geopolitical conditions could still provide room for market relief.

“So the risk premium can decline overall,” Faiz said.

Sovereign Yield Outlook and Fiscal Guardrails

Looking ahead, Faiz expects benchmark Indonesian government bond yields, which have hovered near 7.7%, to compress toward 7.2% next year. He noted that such yield compression will hinge on global monetary conditions, particularly whether the 10-year US Treasury yield recedes toward 4.2%.

To preserve investor confidence and support sovereign ratings, Faiz stressed that the fiscal deficit must strictly respect the statutory 3% ceiling.

“That is why we must maintain our fiscal commitment to a budget deficit capped at 3% of GDP, so that sovereign rating agencies do not continually monitor or highlight our downside risks,” Faiz said.