Indonesia’s external debt position eased slightly in July 2025, signaling cautious optimism in the country’s fiscal and monetary strategy. Bank Indonesia reported a decline in total foreign debt, driven by slower public sector borrowing and a strong U.S. dollar. As policymakers continue to prioritize long-term debt sustainability, the structure and allocation of external financing remain central to Indonesia’s economic resilience.
Key Facts & Background:
- Total external debt (ULN) as of July 2025:
- US$432.5 billion, down from US$434.1 billion in June 2025
- Year-on-year (YoY) growth:
- 4.1% YoY in July, slowing from 6.3% YoY in June
- Public sector debt:
- US$211.7 billion, growing 9.0% YoY, down from 10.0% YoY in June
- Driven by slower growth in government loans and bond issuance
- 99.9% of public debt is long-term
- Allocation of public ULN by sector:
- Health and social services: 23.1%
- Education: 17.0%
- Government administration, defense, and social security: 15.9%
- Construction: 12.1%
- Transportation and warehousing: 8.9%
- Private sector debt:
- US$195.6 billion, stable month-on-month
- Contracted 0.3% YoY, same as June
- Non-financial corporations: -1.2% YoY
- Financial corporations: +3.6% YoY
- 80.4% of private ULN concentrated in:
- Manufacturing
- Financial and insurance services
- Electricity and gas
- Mining and quarrying
- Debt-to-GDP ratio:
- Dropped to 30.0% in July from 30.5% in June
- Long-term debt dominates total ULN: 85.5% of total external debt
- BI and the government continue coordinated monitoring to ensure debt sustainability
Strategic Insights:
Indonesia’s external debt trajectory in mid-2025 reflects a deliberate shift toward fiscal prudence and structural resilience. The slight decline in total ULN, coupled with a reduced debt-to-GDP ratio, signals effective debt management amid global currency volatility and domestic budgetary pressures. The dominance of long-term debt instruments provides a buffer against refinancing risks and short-term shocks, reinforcing investor confidence.
The slowdown in public sector borrowing suggests a recalibration of fiscal priorities, with a focus on productive sectors such as health, education, and infrastructure. These allocations align with Indonesia’s broader development goals, ensuring that external financing contributes meaningfully to inclusive growth and social welfare. The government’s commitment to measured and accountable debt utilization enhances transparency and policy credibility.
Meanwhile, the contraction in private sector ULN—particularly among non-financial corporations—may reflect cautious corporate sentiment amid global uncertainties. However, growth in financial sector borrowing indicates continued capital market activity and potential for investment-led expansion. The concentration of private debt in strategic industries underscores the importance of maintaining sectoral competitiveness and regulatory clarity.