Indonesia’s External Debt Reaches US$ 430.4 Billion in Q1 2025
Indonesia’s external debt (ULN) reached US$ 430.4 billion (approximately Rp 6,886 trillion using an exchange rate of Rp 16,000 per US dollar) in the first quarter of 2025. This represents a 6.4 percent year-on-year (yoy) increase, according to a report released by Bank Indonesia on May 15, 2025. The growth rate is notably higher compared to the 4.3 percent recorded in the fourth quarter of 2024. This increase highlights the ongoing management of Indonesia’s external financing amidst global economic volatility.
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Government Borrowing Drives Debt Increase
The rise in ULN is primarily attributed to the public sector, particularly the government. The government’s portion of the ULN in Q1 2025 stood at US$ 206.9 billion (approximately Rp 3,310 trillion), showing a significant 7.6 percent yoy growth. This is a considerable increase from the 3.3 percent growth observed in the previous quarter.
Bank Indonesia attributes this surge to the disbursement of new loans and increased foreign capital inflows into international State Bonds (SBN). The government maintains its commitment to fiscal credibility by carefully managing its debt and ensuring its use supports sustainable economic growth.
High Investor Confidence in Indonesia’s Economy
Positive global investor sentiment towards Indonesia’s economic prospects is a key factor driving this increase. The Indonesian government emphasizes its commitment to managing debt responsibly, ensuring accountability and transparency in its usage.
A significant portion of the government’s ULN is allocated to strategic sectors. These include health and social services (22.4 percent), administration and defense (18.5 percent), education (16.5 percent), construction (12.0 percent), and transportation and warehousing (8.7 percent). These investments are crucial for long-term sustainable development.
Private Sector Debt Shows Contraction
In contrast to the government’s debt, the private sector’s ULN in Q1 2025 amounted to US$ 195.5 billion (approximately Rp 3,128 trillion), experiencing a 1.2 percent yoy contraction. While still a contraction, this represents a milder decline compared to the 1.6 percent contraction seen in the previous quarter.
The decrease in private sector ULN primarily stems from the non-financial corporate sector, which contracted by 0.9 percent. The processing industry, financial and insurance services, electricity and gas provision, and mining and quarrying sectors collectively contribute 79.6 percent of the total private sector ULN. Despite the reduction, long-term debt continues to dominate the private sector’s ULN, accounting for 76.4 percent of the total.
Maintaining a Healthy Debt Structure and Managing Risks
Bank Indonesia assures the public that Indonesia’s ULN structure remains healthy. The ratio of ULN to Gross Domestic Product (GDP) stands at 30.6 percent, indicating manageable levels. The majority of the ULN (84.7 percent) consists of long-term debt, which reduces short-term repayment pressures.
Continued coordination between Bank Indonesia and the government ensures the productive use of ULN without jeopardizing national economic stability. The Indonesian government will continue to optimize the role of ULN as a source of development financing, while carefully considering sustainability and mitigating risks associated with external shocks. This balanced approach is crucial for navigating the complexities of the global economic landscape and ensuring sustainable economic growth for Indonesia.
