Government Debt Reaches Rp7,700 Trillion at the End of 2022

The Indonesian Ministry of Finance (Kemenkeu) recorded Indonesia's government debt at Rp 7,733.99 trillion (approximately USD 508 billion) at the end of December 2022. This represents an increase of Rp 825.03 trillion compared to the end of 2021, which stood at Rp 6,908.87 trillion.

According to the January 2023 edition of *APBN Kita*, Indonesia's debt-to-Gross Domestic Product (GDP) ratio at the end of 2022 was 39.57%, down from 41% the previous year, despite the nominal increase in debt.

"The debt-to-GDP ratio remains within safe, reasonable, and manageable limits, accompanied by optimal portfolio diversification," wrote Kemenkeu in the January 2023 edition of *APBN Kita*.

According to Kemenkeu, fluctuations in the government's debt position are influenced by financing transactions such as the issuance and repayment of government securities (SBN), loan drawdowns and repayments, and exchange rate fluctuations.

Government debt is divided into two types: bonds or government securities (SBN), and loans from domestic and foreign sources.

SBN instruments still dominate government debt, accounting for 88.53% or Rp 6,846 trillion at the end of 2022.

The value of government bond debt increased by Rp 755.69 trillion from Rp 6,090.31 trillion at the end of 2021. The surge in SBN debt primarily originated from domestic sources.

Domestic SBN debt at the end of 2022 increased by Rp 629.49 trillion to Rp 5,452.36 trillion. Meanwhile, foreign currency (forex) SBN debt rose by Rp 127.09 trillion to Rp 1,394.53 trillion.

Government debt in the form of loans at the end of last year increased by Rp 68.54 trillion to Rp 887.1 trillion at the end of 2022. The increase in loans primarily came from foreign sources, namely multilateral, bilateral loans, and commercial banks.

Based on currency, the majority of government debt at the end of 2022 was in Indonesian Rupiah, reaching 70.75%. According to Kemenkeu, the large proportion of Rupiah serves as a shield for the government in the face of high volatility in foreign currencies and its impact on foreign debt interest payments.

"With a debt strategy that prioritizes issuance in Indonesian Rupiah, the proportion of foreign currency debt is expected to continue declining in the future, and exchange rate risks can be better managed," stated Kemenkeu.

Currently, ownership of SBN is dominated by local investors, namely banks and Bank Indonesia. On the other hand, foreign investor ownership has shrunk from 38.57% at the end of 2019 to 14.36% at the end of 2022.

"Nevertheless, the government will continue to be wary of various risks that could increase the cost of borrowing, such as global liquidity tightening and the dynamics of monetary policy in developed countries," stated Kemenkeu.