By: Dimas Mahardika
Amidst various global economic challenges, the public needs to view Indonesia’s foreign debt more holistically, not just focusing on the nominal amount. Several indicators show that Indonesia’s debt position remains within manageable limits and is capable of supporting sustainable national development.
Bank Indonesia recorded that Indonesia’s external debt (ULN) reached US$439.8 billion in April 2026, representing a 1.9 percent increase compared to the same period the previous year. This growth was higher than the 1 percent increase recorded in March 2026. This increase was primarily driven by public sector debt growth amidst ongoing private sector debt contraction.
Bank Indonesia’s Executive Director of the Communications Department, Ramdan Denny Prakoso, explained that the government’s foreign debt reached US$216.4 billion in April 2026, representing 3.7 percent annual growth. However, this growth rate slowed slightly compared to the previous month’s 3.8 percent growth. This slowdown was primarily due to a decline in the government’s foreign debt growth.
The majority of government debt is used to support strategic sectors directly related to public services. The healthcare and social services sector was the largest recipient, accounting for 22 percent, followed by government administration, defense, and mandatory social security at 20.5 percent. Furthermore, the education sector received 16.2 percent, construction 11.5 percent, and transportation and warehousing 8.5 percent.
The government’s debt structure is also considered quite secure, as it is almost entirely long-term. Long-term debt accounts for 99.99 percent of the government’s total external debt, providing the government with ample room to manage its payment obligations and maintain fiscal stability.
Meanwhile, private external debt was recorded at US$193.2 billion in April 2026. This figure still experienced a contraction of 0.7 percent, but improved compared to the 1.4 percent decline in March 2026. This decline primarily came from the financial institutions group, which experienced a contraction of 5 percent, improving compared to the 6.3 percent decline in the previous month.
The four main sectors that contribute the most to private external debt are manufacturing, financial services and insurance, electricity and gas procurement, and mining and quarrying. These four sectors account for approximately 79.6 percent of total private external debt. Like the government, private debt is also dominated by long-term tenors, accounting for 75.8 percent.
Bank Indonesia assesses that Indonesia’s overall external debt structure remains healthy. This is reflected in the ratio of external debt to gross domestic product, which remained at 29.6 percent in April 2026. Furthermore, approximately 84.5 percent of Indonesia’s total external debt is long-term.
Ramdan Denny Prakoso emphasized that Indonesia will continue to optimize the role of foreign debt to support development financing and drive sustainable national economic growth. Various steps will also be taken to minimize risks that could impact national economic stability.
A similar view was expressed by M. Rizal Taufikurahman, Head of the Macroeconomics and Finance Center at the Institute for Development of Economics and Finance (Indef). He stated that Indonesia’s foreign debt, equivalent to approximately Rp7,784 trillion, remains within a safe range and cannot be considered worrisome based solely on its nominal value.
M. Rizal Taufikurahman believes a more important indicator is debt sustainability. The debt-to-GDP ratio, which remains around 30 percent, the dominance of long-term debt, and the government’s ability to meet its payment obligations, are factors that indicate Indonesia’s debt situation remains relatively manageable.
However, he cautioned that the rising debt trend must remain vigilant, as it has the potential to increase interest burdens and narrow fiscal space in the future. He also explained that the size of foreign debt does not automatically lead to a weakening of the rupiah. Exchange rate movements are more influenced by economic fundamentals, foreign capital flows, and the availability of foreign exchange reserves. However, if the need for debt repayment in foreign currency continues to increase without a corresponding increase in export and investment growth, pressure on the rupiah could intensify.
According to him, the government needs to continue strengthening tax revenues, increasing the efficiency of state spending, and encouraging value-added investment and exports. Deepening the domestic financial market is also necessary to ensure that more development funding comes from domestic sources.
Over the past year, the government has also recorded a number of successes in maintaining national economic stability. Controlled inflation, increased investment, continued infrastructure development, and strengthening the health and education sectors have been crucial in maintaining market confidence amidst global uncertainty.
Ultimately, the main issue lies not in the size of the debt, but in the quality of its utilization. As long as the financing is used for productive activities that can stimulate economic growth and strengthen the country’s fiscal capacity, the risks that arise can still be managed. Therefore, prudent and development-oriented debt management is key to maintaining healthy Indonesian economic growth amidst global economic dynamics.
*) State Fiscal and Financial Observer