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View all search resultsAnalysis: Foreign debt climbs to Rp 8 quadrillion amid weak loan usage
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An Rp 100,000 banknote is pictured next to a US$100 banknote at a currency exchange office in Jakarta on June 4, 2026, after the rupiah weakened beyond Rp 18,000 per US$1 for the first time. (AFP/Yasuyoshi Chiba)
I
ndonesia’s external debt has continued to rise and reached a new high of Rp 8 quadrillion ($444 billion) in May 2026. The increase was primarily driven by government and central bank debt, which accounted for 55.9 percent of total external debt, or US$248.5 billion, after growing 3.89 percent year-on-year (yoy).
In contrast, private sector external debt contracted 0.12 percent to $195.9 billion, highlighting that Indonesia’s rising external debt has been largely driven by public sector financing needs, while private sector borrowing remains subdued, raising questions over whether available financing is being effectively translated into productive economic activity.
Government debt grew 3.67 percent yoy to $217.3 billion, mainly to support financing across key sectors including health services and social assistance, which accounted for 22 percent of total government external debt, followed by public administration, defense and mandatory social security (20.6 percent), education services (16.2 percent), construction (11.5 percent) as well as transportation and warehousing (8.5 percent).
Meanwhile, central bank debt increased 5.44 percent yoy to $31.1 billion, driven by higher foreign ownership of Bank Indonesia Rupiah Securities (SRBI), in line with the monetary operations and efforts of Bank Indonesia (BI) to maintain rupiah exchange rate stability.
In the private sector, nonfinancial corporation debt recorded a marginal increase of 0.04 percent yoy to $156.8 billion, while financial corporation debt contracted 1.22 percent yoy to $39.1 billion. The contrasting movements indicate that the increase in the country’s external debt mainly reflects higher public sector financing needs rather than stronger private sector borrowing.
Although private sector external debt declined slightly overall, its short-term obligations showed a different trend. Short-term private sector debt, defined as debt with an original maturity of one year or less, increased 9.37 percent yoy to $49.2 billion, indicating higher near-term financing requirements among businesses.
The private sector contributed 68.8 percent to Indonesia’s overall short-term external debt, which rose 8.4 percent yoy to $71.59 billion, accounting for 16.11 percent of total external debt. Similarly, short-term central bank debt increased 7.45 percent yoy to $22.35 billion, while short-term public sector debt fell sharply 94.37 percent yoy to $13 million.
