Jakarta (ANTARA) - PermataBank Chief Economist Josua Pardede\nestimates that Indonesia\u2019s external debt (ULN) ratio to gross domestic\nproduct (GDP) will remain relatively stable in the second half of 2026,\nat around 30\u201331 per cent of GDP, with an end-of-year projection of\nroughly 30.5\u201331.0 per cent.<\/p>\n
\u201cThis position is still considered under control, because external\ndebt in the second quarter, at US$453.4 billion, did grow 4.4 per cent\nyear on year, but its overall structure remains dominated by long-term\ndebt at 82.1 per cent. Private external debt actually contracted by 0.6\nper cent, and 75.7 per cent of private external debt is long term,\u201d\nJosua said when contacted by ANTARA in Jakarta on Tuesday.<\/p>\n
He added that the IMF also considers a ratio of around 30 per cent to\nbe moderate, and Indonesia\u2019s refinancing risk relatively limited,\nalthough dependence on foreign portfolio investment remains a point of\nvulnerability.<\/p>\n
According to him, pressure for a higher ratio in the second half\ncould come from greater state budget (APBN) financing needs and rising\nforeign ownership of domestic securities. However, this is likely to be\noffset by nominal economic growth and private external debt that has not\nshown aggressive expansion.<\/p>\n
\u201cThe government\u2019s financing strategy also continues to prioritise\ndomestic sources and the rupiah, so foreign exchange risk does not\nincrease in proportion to gross financing needs,\u201d he said.<\/p>\n
In terms of structure, Josua estimates that the short-term external\ndebt ratio, based on remaining maturity against foreign exchange\nreserves in July 2026, will remain at around 71\u201374 per cent, with a\nmidpoint of roughly 72\u201373 per cent, while for the second half the\nbaseline scenario range is 68\u201375 per cent.<\/p>\n
He explained that the development of the short-term external debt\nratio to foreign reserves does need to be watched, but it has not yet\nshown a critical level of external vulnerability.<\/p>\n
The short-term external debt ratio based on remaining maturity\nagainst foreign reserves was relatively controlled throughout 2025\nbefore jumping in the second quarter of 2026 \u2014 from 55.57 per cent in Q2\n2025, down to 52.96 per cent in Q3 and 49.99 per cent in Q4, then rising\nto 55.82 per cent in Q1 2026 and surging to 72.77 per cent in Q2.<\/p>\n
Meanwhile, the external debt ratio to GDP changed only slightly, from\n30.51 per cent to 30.63 per cent. This means, according to Josua, that\nwhat needs attention now is primarily not the size of the overall\nexternal debt stock, but changes in its maturity structure and foreign\nexchange needs over the next 12 months.<\/p>\n
Remaining maturity measures all obligations falling due within a\nmaximum of one year, including debt that was originally long term but is\nnow approaching maturity, he added.<\/p>\n
Upon closer examination, the surge largely stems from an increase in\nshort-term liabilities of the public sector, particularly Bank Indonesia\n(BI), not from a spike in private debt.<\/p>\n
Total external debt maturing within one year rose from around US$84.8\nbillion in June 2025 to US$105.9 billion in June 2026.<\/p>\n
Over the same period, government and central bank obligations rose\nfrom around US$34.5 billion to US$51.6 billion, whilst private\nobligations rose more modestly from around US$50.3 billion to US$54.4\nbillion.<\/p>\n
Within the central bank component, the increase was around US$14.3\nbillion, contributing roughly two-thirds of the rise in short-term\nexternal debt based on remaining maturity.<\/p>\n
\u201cThis is consistent with Bank Indonesia\u2019s explanation that the\nincrease in central bank external debt mainly comes from rising foreign\ninvestor ownership of SRBI securities. This is an important nuance,\nbecause SRBI are rupiah-denominated securities held by foreign\ninvestors,\u201d Josua said.<\/p>\n
Consequently, he continued, the risk is more about the possibility of\nrapid portfolio outflows and conversion of rupiah into foreign currency,\nrather than purely dollar-denominated principal payment obligations.\nThus, the figure of 72.77 per cent in Q2 2026 should not be interpreted\nas if it were entirely dollar debt that must be repaid using foreign\nreserves.<\/p>\n
Josua also cautioned that policy attention should not be limited to\nmaintaining the external debt-to-GDP ratio, but should also focus on\nsafeguarding foreign currency liquidity ahead of maturity dates.<\/p>\n
Bank Indonesia needs to use periods of capital inflows to rebuild\nforeign reserves, whilst intervention should be directed at moderating\nexcessive rupiah movements rather than defending a specific exchange\nrate level.<\/p>\n
On the other hand, the government needs to maintain a long maturity\nprofile and limit the bunching of payments in certain periods, he\nsaid.<\/p>\n
Meanwhile, on the private side, he said hedging discipline and\nliquidity adequacy are becoming increasingly important, given that Bank\nIndonesia\u2019s prudential framework does require minimum hedging ratios and\nminimum liquidity ratios for companies holding foreign currency\ndebt.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/economist-predicts-external-debt-ratio-to-remain-relatively-stable-in-second-half-1789444448", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }