Indonesia Seeks to Reduce Dollar Dependence, Finance Ministry Explains Rationale
The Ministry of Finance has revealed the government is seeking to reduce its dependence on the United States dollar by diversifying financing into other currencies. Acting Director General of Financial Sector Stability and Development, Herman Saheruddin, stated that payment diversification is necessary so that Indonesia is not overly reliant on the US dollar, ensuring that when the dollar strengthens sharply, it does not place too great a burden on the state budget (APBN).
“We are now diversifying our financing. If we are too dependent on the US dollar, it will burden our state budget, because the dollar is an anomalous currency. So, if we only depend on the dollar, I think it will become less stable,” Herman said when met by journalists at his office on Thursday (25/6/2026).
One diversification measure involves the renminbi, known as the yuan, China’s currency. The Ministry of Finance will issue yuan-denominated bonds, or Panda Bonds, to strengthen this diversification. “The reason for issuing Panda Bonds is to seek other sources of financing, or it can be said, diversification. With this diversification, the hope is that the risk to our state budget burden from debt financing sourced from exchange rate risk can be diversified, and we can reduce the impact of US dollar dependence,” he explained.
Herman views China as one of the countries that can assist with financing diversification, as the rating of these bonds still reflects Indonesia’s fundamentals. “China is one of several countries interested in providing financing to Indonesia by purchasing our bonds at pricing that makes sense, meaning it is not far from our fundamentals,” he added.
Although the government continues to diversify into other currencies, he explained that efforts to eliminate dollar dependence will take a considerable amount of time because the US dollar is still widely accepted by many countries. “But to eliminate the US dollar completely is impossible to do in the short or medium term, because the dollar is still accepted as a currency in many countries, a hard currency, so to speak,” he stated.