Government Debt Rises Again, Reaching Rp7.496 Trillion by October; Majority Held by Foreigners

Government debt in Indonesia increased again by July 2022, reaching Rp7,496.70 trillion. The Ministry of Finance recorded this figure, which is higher than the Rp7,420.4 trillion recorded at the end of September 2022. However, the government debt-to-Gross Domestic Product (GDP) ratio stands at 38.36%, lower than the 39.69% recorded in the same period the previous year.

The Minister of Finance stated that this increase is within safe, reasonable, and manageable limits, accompanied by optimal portfolio diversification, as quoted from the November 2022 edition of the APBN KiTA book on Monday, November 28th.

To maintain accountability in debt management, the government adheres to regulations within the APBN implementation framework. This framework is planned in conjunction with the DPR (House of Representatives), approved and monitored by the DPR, and audited by the BPK (Supreme Audit Agency).

By type, government debt is dominated by SBN (State Bonds) instruments, accounting for 88.97% of the total debt composition at the end of October 2022, or Rp6,670.13 trillion. SBN debt increased by Rp62.65 trillion in one month, with more than half originating from foreign currency SBNs.

Based on currency, government debt is predominantly in domestic currency (Rupiah), at 70.54%. This strategy serves as a shield against high volatility in foreign currencies and its impact on foreign debt payments. By prioritizing the issuance of Rupiah-denominated debt, the proportion of foreign currency debt is expected to continue declining, mitigating exchange rate risks.

Currently, SBN ownership is dominated by banks, followed by Bank Indonesia (BI), while foreign investor ownership has been declining since 2019. It decreased from 38.57% at the end of 2019 to 19.05% at the end of 2021, and to 14.00% as of October 14, 2022.