Jakarta (Indonesia Window) – Indonesia's foreign debt at the end of August 2022 was recorded at 397.4 billion U.S. dollars, down from the previous month's position of 400.2 billion dollars.

This development was caused by a decrease in foreign debt of the public sector (the government and the central bank) and the private sector, Director of the Communications Department at Bank Indonesia (BI), Junanto Herdiawan, said in an official statement on Monday.

According to Junanto, on an annual basis, the foreign debt position in August 2022 contracted by 6.5 percent (year-on-year/yoy), deeper than the contraction in the previous month which stood at 4.1 percent (yoy).

The government's foreign debt in August 2022 continued the downward trend, Junanto said, adding that the government's foreign debt in August 2022 totaled 184.9 billion dollars, lower than the previous month's position of 185.6 billion dollars.

On an annual basis, the government's foreign debt contracted by 10.9 percent (yoy), deeper than the contraction in July 2022 which was 9.9 percent (yoy), he said.

The decline in the government foreign debt was due to a decrease in loans in line with higher loan repayments than loan withdrawals to support the financing of priority programs and projects.

Meanwhile, the net State Securities position rose in line with the increase in domestic State Securities inflows, reflecting the maintained confidence of foreign investors in the midst of high uncertainty in global financial markets.

The government remains committed to maintaining credibility by fulfilling the obligation to pay principal and interest on debt in a timely manner, as well as managing foreign debt in a prudent, credible and accountable manner, Junanto added.

Indonesia's foreign debt withdrawals carried out in August 2022 were still directed at financing the productive sector and efforts have been made to continue to encourage the acceleration of the National Economic Recovery, he said.

The government foreign debt support in meeting financing for the productive sector and priority spending necessities includes, among others, the sector of health services and social activities (24.5 percent of the total government foreign debt), the education services sector (16.6 percent), the government administration, defense, and compulsory social insurance sector (15.2 percent), the construction sector (14.2 percent), and the financial services and insurance sector (11.7 percent).

The position of the government foreign debt is relatively safe and under control, considering that almost all of them are long-term foreign debt with a share of 99.9 percent of the total government foreign debt.

The private foreign debt also continued the downward trend. The position of private foreign debt in August 2022 was recorded at 204.1 billion dollars, a decrease from the previous month's position of 206.1 billion dollars.

On an annual basis, the private foreign debt contracted 2.0 percent (yoy), deeper than the 1.2 percent (yoy) contraction in the previous month.

This development was caused by a contraction in foreign debt of financial corporations and non-financial corporations by 3.6 percent (yoy) and 1.6 percent (yoy) respectively, partly due to net payments of trade payables and other obligations.

Reporting by Indonesia Window