New Record: Indonesia's Yuan-Denominated Debt Hits All-Time High

Indonesia’s external debt from the world’s two largest economies, the United States and China, both declined in April 2026, yet the gap between them remains relatively narrow. Bank Indonesia released its External Debt Statistics for June 2026 on Monday, showing the country’s total external debt stood at US$439.7 billion, growing 1.9% year-on-year. This growth was higher than the 1.0% recorded in March 2026. Converted to rupiah at an assumed exchange rate of Rp17,680 per US dollar, the position equates to roughly Rp7,773.9 trillion. The central bank noted the development was influenced by public sector external debt growth amid a continued contraction in private sector external debt. Government external debt in April 2026 was recorded at US$216.4 billion, growing 3.7% year-on-year, slightly lower than March’s 3.8% growth. This was mainly influenced by a slowdown in foreign loan positions, while foreign capital inflows into government securities continued to record net inflows, reflecting sustained investor confidence in Indonesia’s economic prospects. Private external debt stood at US$193.2 billion, still contracting 0.7% year-on-year, an improvement from the previous month’s 1.4% contraction. Indonesia’s external debt from the United States was recorded at US$27.99 billion in April 2026, down from US$28.02 billion in March, a monthly decline of 0.11%. External debt from China was recorded at US$25.43 billion, down from US$25.62 billion in March, a monthly decline of 0.74%. The difference between the two positions was US$2.56 billion, equivalent to about Rp45.26 trillion. Over recent years, Chinese financing has been linked to infrastructure and connectivity projects, while American financing is more visible through financial market instruments and high-value sectors. Despite the decline in debt owed to China as a creditor nation, Indonesia’s external debt denominated in Chinese yuan surged to a record high. In April 2026, yuan-denominated external debt reached US$17.24 billion, up from US$16.99 billion in March, an increase of US$248 million or 1.46% month-on-month. This rise comes amid closer financial cooperation between Bank Indonesia and the People’s Bank of China, who recently held a high-level meeting in Shanghai to reaffirm their commitment to expanding the use of local currencies in bilateral transactions. The cooperation includes strengthening the Local Currency Transaction framework, exploring an enhanced Bilateral Currency Swap Agreement, and establishing a Renminbi Clearing Arrangement in Indonesia. The clearing facility is expected to bolster the yuan ecosystem domestically, making trade, investment, and financial transactions between the two nations more efficient. Additionally, the two central banks launched the implementation of Indonesia-China cross-border QR payments and the participation of Bank Mandiri as a direct participant in the Cross-border Interbank Payment System, further strengthening payment system connectivity and facilitating cross-border settlement.