Indonesia’s Foreign Debt Jumps in 2014 as Companies Borrow More
Jakarta. Indonesia foreign debt growth accelerated last year as the country’s companies needed to borrow foreign funds from abroad to fill gaps left by weak exports revenue.
The foreign debt outstanding was at $292.6 billion as of the end of last year, up 10 percent from $266 billion at the end of 2013, according to data from Bank Indonesia, the country central bank, on Wednesday.
The pace of debt was more than doubled that of 2013 when growth was 4.6 percent. That was mainly due to higher foreign loans in the private sector, which increased 14 percent to $162.8 billion and in the public sector, which rose 5 percent to $129.7 billion, the central bank said in the statement.
The private sector’s double-digit debt growth was in stark contrast to its 2 percent contraction in 2013.
Indonesia has to rely more on foreign financing to fill the gap of the current account as weak global commodity prices and demand put pressure on exports while robust domestic consumption sustains demand for imports.
The country’s current account deficit narrowed to $26.2 billion, or 2.95 percent of gross domestic product last year, from 3.18 percent of GDP in 2013.
The debt-to-service ratio — which indicates how much the country’s exports receipt and external incomes were used in paying back foreign loans — increased to 33 percent last year from 19 percent in 2013.
The country’s debt-to-GDP ratio rose to 46 percent from 30 percent.
Still, the central bank may be relieved by the fact that the majority of public and private debt would be due in more than a year, removing some pressure on the rupiah this year.
The public sector’s long-term debt stood at $126.1 billion, or 97.2 percent of total public sector external debt, while long-term external debt of the private sector stood at $118.9 billion, or 73 percent of total private sector external debt. That means only $47.6 billion of total foreign debt that will due in one year time.
Bank Indonesia said that the external debt position “remained healthy, although caution of its risk on the economy is still needed.”
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Source: The Jakarta Globe