Indonesia’s Foreign Debt Decreases in Q3 2025

Jakarta – Bank Indonesia (BI) reported that Indonesia’s total Foreign Debt (ULN) in the third quarter of 2025 reached US$424.4 billion, equivalent to IDR 7,087 trillion (using an exchange rate of IDR 16,700). This represents a decrease compared to the US$432.3 billion recorded in the second quarter of 2025.

Key Findings & Trends

According to BI data, Indonesia’s external debt experienced a year-on-year contraction of 0.6% in the third quarter of 2025. This marks a significant shift from the 6.4% year-on-year growth observed in the second quarter of 2025.This contraction indicates a positive trend in managing the country’s external financial obligations.

Breakdown of foreign Debt

Indonesia’s foreign debt is categorized into two main components: public debt and private debt.Understanding the composition of this debt is crucial for assessing financial stability.

• Public Debt: This includes debt owed by the government and state-owned enterprises.
• Private Debt: This encompasses debt held by the private sector, including corporations and financial institutions.

The decrease in overall foreign debt was driven by a combination of factors, including government efforts to reduce borrowing and favorable exchange rate movements. A stronger Rupiah against the US Dollar can reduce the Rupiah value of USD-denominated debt.

Impact of Decreasing Foreign Debt

A reduction in foreign debt can have several positive implications for the Indonesian economy:

• Reduced Vulnerability: Lower debt levels reduce Indonesia’s vulnerability to external economic shocks, such as changes in global interest rates or commodity prices.
• Improved Credit Rating: Prudent debt management can lead to improvements in Indonesia’s sovereign credit rating, making it cheaper to borrow in the future.
• Increased Fiscal Space: Reduced debt servicing costs free up government resources for investment in infrastructure,education,and healthcare.

factors Contributing to the Decline

Several factors contributed to the decline in Indonesia’s foreign debt in Q3 2025:

• government Policy: The Indonesian government has actively pursued policies aimed at reducing reliance on foreign borrowing. Ministry of Finance initiatives have focused on attracting domestic investment and strengthening the Rupiah.
• Economic Growth: Sustained economic growth has improved Indonesia’s ability to repay its debts.
• Exchange Rate Fluctuations: A relatively stable and appreciating Rupiah has helped to reduce the Rupiah-denominated value of foreign debt.

Looking Ahead

Bank Indonesia will continue to monitor Indonesia’s foreign debt levels closely and implement policies to ensure enduring debt management. Maintaining a healthy balance between foreign borrowing and domestic financing is essential for supporting long-term economic stability and growth. Continued focus on attracting foreign direct investment (FDI) and diversifying the economy will also play a crucial role in reducing reliance on debt.

Key Takeaways

• Indonesia’s foreign debt decreased to US$424.4 billion in Q3 2025.
• The year-on-year contraction of 0.6% is a positive sign for the Indonesian economy.
• Decreasing foreign debt reduces vulnerability to external shocks and improves fiscal space.
• Government policies, economic growth, and exchange rate fluctuations contributed to the decline.

Publication Date: 2025/11/17 06:42:21