Indonesia's Debt-to-GDP Ratio Predicted to Rise Up to 30% in 2023

The debt service ratio (DSR), representing the proportion of payments for debt and interest, is projected to increase to 25-30% in 2023. This is an increase from the 21.71% recorded by Bank Indonesia (BI) at the end of 2021.

According to Bhima Yudhistira, Director of the Center of Economic and Law Studies (CELIOS), Indonesia's DSR is expected to rise next year due to increasing global uncertainty, which also affects Indonesia.

"The conditions in 2023 are quite dynamic, with game changers such as moderation in commodity prices, widening of the state budget deficit, weakening of the rupiah exchange rate, upward pressure on interest rates, and global uncertainty. This adds to the burden of debt repayment capacity," explained Bhima, as reported by Kontan.co.id on Monday (October 24).

Additional foreign exchange from the commodity sector and strong exports led to a decrease in the DSR in 2021. From the government's budget perspective, the addition of foreign debt has slowed down as the state budget continues to show a surplus.

For information, total payments for External Debt (ULN) in Tier 1 include principal and interest payments on long-term debt and interest payments on short-term debt. Meanwhile, total ULN payments in Tier 2 include principal and interest payments on debt for direct investment other than from subsidiaries abroad, as well as loans and trade debt to non-affiliates.

(read: This is the Top 5 Largest Creditors to Indonesia)