(link?)Indonesia External Debt Risks Rise on Short-Term Maturities

RRI.CO.ID, Jakarta – Indonesia’s external debt risk is shifting toward concerns over its maturity profile. While the external debt‑to‑GDP ratio is expected to remain stable, foreign exchange needs over the next 12 months have drawn market attention.

Permata Bank Chief Economist Josua Pardede estimates that the external debt‑to‑GDP ratio will remain in the range of 30–31 percent in the second half of 2026, with a year‑end level of around 30.5–31.0 percent.

“This position is still considered manageable because second‑quarter (Q2 2026) external debt stood at USD 453.4 billion--a 4.4 percent year‑on‑year increase--yet the overall structure remains dominated by long‑term debt at 82.1 percent,” Josua said in Jakarta on Tuesday, September 15, 2026, as quoted by Antara.

Private‑sector external debt continued to contract by 0.6 percent, with 75.7 percent consisting of long‑term debt. The International Monetary Fund (IMF) also views a ratio of around 30 percent as moderate, although reliance on foreign portfolio investment remains a vulnerability.

Pressure on the ratio could arise from State Budget financing needs and increased foreign ownership of domestic securities. However, nominal economic growth and limited expansion of private‑sector external debt are expected to offset this pressure.

“The government’s financing strategy continues to prioritize domestic sources and the rupiah, so foreign exchange risk does not rise in proportion to gross financing needs,” he said.

Market focus has now shifted to short‑term external debt, given remaining maturities. The ratio to foreign exchange reserves is projected to be 68–75 percent in Q2 2026, after rising from 55.82 percent in Q1 2026 to 72.77 percent in Q2 2026.

Total liabilities maturing within one year increased from USD 84.8 billion in June 2025 to USD 105.9 billion in June 2026. Government and Bank Indonesia (BI) liabilities rose from USD 34.5 billion to USD 51.6 billion, while private‑sector liabilities increased from USD 50.3 billion to USD 54.4 billion.

The increase in the central bank’s component amounted to approximately USD 14.3 billion. “This is consistent with BI’s explanation that the rise in the central bank’s external debt primarily stems from increased foreign investor holdings of BI’s Rupiah Securities (SRBI),” Josua said.

According to Josua, the main risk lies not solely in dollar‑denominated debt payments, but in the potential for rapid portfolio outflows and the conversion of rupiah into foreign currency.

Therefore, BI needs to strengthen its foreign exchange reserves as capital flows in. The government should maintain long debt tenors; and corporations should reinforce their hedging and liquidity positions. ***