Bank Indonesia data shows that government external debt rose to US$217.33 billion.
However, what is in the spotlight is not only the increase, but also the shift in debt sources.
Indonesia is now increasingly reducing loans from foreign governments and international institutions, and is relying more on market financing through the issuance of global bonds.
Loans from official creditors fell to US$54.95 billion, while the share of private creditors reached US$162.38 billion.
The largest component came from International Government Securities or global bonds which reached US$97.43 billion.
Economists assess that this change occurred because Indonesia has moved up the class as a middle-income country and is considered capable of accessing global markets.
The advantage is that the government can get funds more quickly, more flexibly, and from a wider investor base.
However, the risks are also greater.
Market-based debt is usually more expensive and more sensitive to global interest rates, strengthening of the US dollar, weakening of the rupiah, investor sentiment and changes in credit ratings.
This means that Indonesia is increasingly independent in seeking financing, but has to pay higher costs and market risks.
In your opinion, is Indonesia’s move to switch to global bonds a sign that the economy is getting stronger?
Or does it actually make the APBN more vulnerable to global turmoil?
Source: Bloomberg
