Fifty subject one dollar note sheets sit in a stack before receiving a serial number and the US Treasury and US Federal Reserve seals at the US Bureau of Engraving and Printing in Washington DC, on April 14, 2015. (Bloomberg Photo/Andrew Harrer)

Growth of Foreign Debt Slows in February


APRIL 17, 2015

Jakarta. Indonesia’s foreign debt grew at a slower pace in February as both the public and private sectors held back from taking on more debt.

The country’s total foreign debt rose 9.4 percent to $299 billion in February, according to data from Bank Indonesia on Friday. The growth was slower than the 11 percent pace in January.

Public foreign debt rose 4.4 percent to $135 billion in February, slower than the pace of 6.1 percent the previous month.

Private companies’ foreign debt also increased by a slower pace, 13.8 percent, to $164.1 billion. That compared to 14.4 percent a month earlier.

Most of the debts are due in more than a year’s time, the central bank data showed, easing concern on liquidity pressure for the coming month. The long-term external debt of the public sector reached $131.3 billion, or 98 percent of total public sector external debt. The long-term external debt of the private sector stood at $123.7 billion, or 75 percent of total private external debt.

Long-term foreign debt increased 9.8 percent in February, slower than the 11 percent growth in January. Meanwhile, short-term external debt grew 7.2 percent, slower than 8.1 percent the previous month.

The private companies’ foreign debts were concentrated in the financial, manufacturing, mining and electricity, gas and water supply sectors.

Bank Indonesia called the external debt expansion was “healthy,” but said it would monitor private companies’ foreign debt development.

“This is aimed at optimizing the role of external debt in supporting development financing without incurring risks that may affect macroeconomic stability,” the central bank said.

Bank Indonesia has encouraged firms to hedge their foreign exchange liabilities to shield themselves from rupiah volatility. The local currency has fallen 3.4 percent against the US dollar this year, as the greenback gains strength on anticipation of a rate hike by the US Federal Reserve later this year.

Several state-owned companies such as power utility PLN, Krakatau Steel, and flag carrier Garuda Indonesia have entered into hedging agreement with local banks.

Standard & Poor’s said Indonesian companies’ debt expanded 240 percent from 2003 to 2013, in line with the growth in capital expenditure and earnings, suggesting a strong credit profile.

The ratings service found Indonesia’s credit profile “seems most balanced” compared to China and India, but it was also the “slowest in growing,” S&P said Friday.