Kuala lumpur: Indonesia's external debt rose to US$444.4 billion in May, with annual growth accelerating slightly to 2.1 percent year-on-year (y-o-y) from 2.0 percent in April, supported by continued expansion in public sector borrowing.

According to BERNAMA News Agency, Bank Indonesia's (BI) Communication Department executive director, Ramdan Denny Prakoso, stated that the country's debt structure remained sound, supported by prudent management. This is reflected in the debt-to-gross domestic product (GDP) ratio of 29.9 percent, with long-term debt accounting for 83.9 percent of the total. The development was influenced by continued growth in public external debt, comprising the government and central bank, amid a shallower contraction in private external debt.

Government external debt stood at US$217.3 billion in May, with an annual growth of 3.7 percent y-o-y, remaining relatively stable from April. The growth was mainly due to inflows into international government securities (SBN), reflecting investor confidence in Indonesia's economic outlook amid net repayments of maturing government foreign loans. The government is committed to maintaining credibility by fulfilling principal and interest payment obligations on time, while managing external debt prudently, measurably, and flexibly to achieve efficient and optimal financing.

Government external debt continues to finance productive sectors, primarily health and social activities (22.0 percent), public administration, defense and compulsory social security (20.6 percent), education (16.2 percent), construction (11.5 percent), as well as transportation and storage (8.5 percent). Nearly all government external debt has a long-term maturity profile, while the increase in BI's external debt is driven by higher non-resident holdings of monetary instruments, namely BI Rupiah Securities, in line with the central bank's pro-market monetary operations and efforts to maintain rupiah exchange rate stability.

Private external debt stood at US$195.9 billion in May, with its annual contraction narrowing to 0.1 percent y-o-y from 0.5 percent in April. This is mainly attributable to external debt at financial corporations, which recorded an annual contraction of 0.8 percent y-o-y. The main contributors to private external debt are the manufacturing industry, financial and insurance activities, electricity and gas supply, as well as mining and quarrying, which together account for 79.9 percent of total private external debt, while long-term maturities represent 74.9 percent of the total.

Ramdan noted that BI and the government would continue strengthening coordination to monitor external debt developments while optimizing the role of external debt in supporting development financing and sustainable national economic growth, while minimizing risks to economic stability.