How the Rupiah's Weakness Increases the Government's Debt Burden

The rupiah exchange rate strengthened by 7 points on Friday, 10 April 2026, to Rp17,083 per US dollar from the previous close of Rp17,090 per US dollar. By Friday noon at 11:00, Bloomberg data showed the rupiah had breached the Rp17,101 per US dollar level, while Trading Economics indicated Rp17,102 per US dollar.

Economist and lecturer at Paramadina University, Wijayanto Samirin, stated that the rupiah’s weakening poses a risk to the government’s debt burden in foreign currencies, which is substantial, especially for dollar-denominated repayments. “This will increase interest costs and principal repayments in rupiah,” he told Tempo, as quoted on Friday, 10 April 2026.

He estimated that the government’s foreign currency debt currently stands at around 25% of total debt. This situation risks elevating the debt-to-revenue ratio (debt service ratio). “My estimate is that the debt service ratio will rise from 49% to 51% if the US dollar settles at Rp17,000,” he said.

Based on the Indonesian External Debt Statistics released by the Ministry of Finance, the government’s external debt (ULN) as of January 2026 was recorded at US$216.3 billion. Of this total debt, dollar-denominated debt amounted to US$107.46 billion, equivalent to approximately Rp1,826.82 trillion assuming an exchange rate of Rp17,000 per US dollar. Overall, the government’s debt position is currently recorded at Rp9,637.90 trillion.

Meanwhile, researcher at the Center of Reform on Economics Indonesia, Yusuf Rendy Manilet, explained that the impact of the rupiah’s weakening on the state budget (APBN) is not straightforward and operates through multiple channels simultaneously. The most directly visible effect is on energy subsidies, as oil prices are paid in dollars. Indonesia still imports oil.

Every weakening of the exchange rate will directly increase energy procurement costs, thereby raising the subsidy burden. “Beyond that, there is also pressure from foreign currency debt repayment obligations, as well as government spending that still relies on imports,” said Yusuf.

The rupiah exchange rate against the dollar in the 2026 APBN macroeconomic assumptions is set at Rp16,500 per US dollar. Based on the sensitivity model outlined in the Financial Note Book for the 2026 Draft APBN, every 100-point weakening of the rupiah per dollar results in a revenue increase of Rp5.3 trillion and state expenditure swelling by Rp6.1 trillion. Thus, for every 100-point weakening from the Rp16,500 per US dollar assumption, the APBN will face a deficit of around Rp800 billion.