Private Offshore Debt Up in April

Indonesia private sector keeps borrowing from overseas to finance their expansion amid deficit in the country's current account. (JG Photo/Safir Makki)

Jakarta. Private sector foreign debt kept accelerating in April, exposing Indonesia’s growing dependency on overseas financing as the country bought more goods and services abroad than it sold.

The external debt of private sector grew 13 percent to $145.6 billion two months ago, compared to the same month last year, data from Bank Indonesia showed on Tuesday.

The pace was higher than the 12 percent pace increase recorded a month earlier.

While public debt grew by 2.2 percen t to $131 billion, slowing from the 5.1 percent growth pace recorded in the preceding month.

That lifted the country’s total foreign debt to $276.6 billion in April this year, up 7.6 percent from the same period a year ago.

However, foreign debt growth was slower in April from 8.7 percent in March.

While noting the level of external debt “remained healthy in supporting external resilience,” Bank Indonesia is concerned about the level of private debts, the central bank said in the statement.

“Bank Indonesia will continue to monitor the growth of Indonesia’s external debt, especially private sector external debt, so as to optimally support development financing without jeopardizing macro-economic stability,” the bank said.

A surprise trade deficit of $1.96 billion in April stoked worries that the country’s current-account deficit was widening instead of narrowing.

Indonesia posted a $4.2 billion deficit, or 2 percent of its gross domestic product, in the current-account balance in the first quarter.

The current-account deficit means the country heavily relies on foreign loans to finance its imports of mainly fuel and machinery, which could result in severe problems should the financing stop.

The growth in private foreign debt in the manufacturing sector accelerated by 14 percent in April, compared with the previous month’s 8.5 percent.

The foreign loans in the mining and quarrying sector expanded by 15 percent, up from 12 percent.

But the financial sector —including banks, securities companies, multi-finance services and fund managers — grew at a pace of 12 percent compared to 14 percent pace a month earlier.

Long-term external debt stood at $229.7 billion in April, accounting for 83 percent of the total external debt.

Long-term public sector external debt reached $124.6 billion or 95 percent of the total public sector external debt, while the long-term private sector external debt amounted to $105.1 billion or 72 percent of total private external debt.

By Woodwing Importer on 08:20 pm Jun 17, 2014