Indonesia's External Debt Reached Rp 5,298 Trillion in July 2018

Indonesia's external debt increased by US$2.04 billion (0.57%) to US$357.98 billion in July 2018, equivalent to Rp5,298 trillion, compared to the previous month. This amount comprises government and central bank external debt valued at US$180.83 billion, or Rp2,676.29 trillion at an exchange rate of Rp14,800 per US dollar, and private sector debt of US$177.15 billion, or approximately Rp2,621.76 trillion.

The weakening of the rupiah and the rise in Indonesian bond yields have increased the burden of external debt costs in US dollars for both the government and the private sector. The depreciation of the rupiah adds to the burden of principal and interest payments, particularly for companies with rupiah-denominated revenue. Similarly, the rise in government bond yields will also burden both the government and the private sector when paying principal and interest on maturing loans.

For information, the rupiah has weakened by approximately 8.7% this year to Rp14,840 per dollar. Meanwhile, the yield on 10-year government bonds in rupiah has increased by 189 basis points to 8.21%, and in US dollars by 103 basis points to 4.56%. The rise in yields makes borrowing more expensive, as lenders will demand higher returns than before.