Indonesia’s external debt dropped to 424.4 billion US dollars in the third quarter of 2025, down from 432.3 billion US dollars in the previous quarter. On a yearly basis, external debt contracted by 0.6%, following a 6.4% increase in Q2 2025. This shift was influenced by slower growth in public sector debt and a decline in private external debt.

Government External Debt Growth Slows

Government external debt reached 210.1 billion US dollars in Q3 2025, with annual growth moderating to 2.9% from 10.0% in Q2 2025. Reduced foreign capital inflows to domestic government securities contributed to this slowdown amid persistent global financial market uncertainty.

External debt, as part of the State Revenue and Expenditure Budget (APBN), is managed prudently and directed toward priority programs that strengthen Indonesia’s economic growth. By sector, government external debt supports human health and social activities (23.1%), public administration, defense, and social security (20.7%), education (17.0%), construction (10.7%), transportation and storage (8.2%), and insurance and financial services (7.5%). Nearly all government debt (99.9%) is long-term.

Private External Debt Contracts

Private external debt declined to 191.3 billion US dollars in Q3 2025, down from 193.9 billion US dollars in Q2 2025. Year-on-year, private external debt contracted by 1.9%, after a 0.2% decrease in the previous quarter. Financial corporations saw a 3.0% decline, while non-financial corporations’ debt fell by 1.7%. Key sectors contributing to private external debt included manufacturing, insurance and financial services, electricity and gas supply, and mining and quarrying, together accounting for approximately 81% of total private debt.

External Debt Structure Remains Healthy

Indonesia maintains a sound external debt structure, with the ratio of external debt to GDP declining to 29.5% in Q3 2025 from 30.4% in Q2 2025. Long-term debt dominates, representing 86.1% of total external debt. Bank Indonesia and the government continue to monitor debt developments closely, ensuring it support financing for development and sustainable economic growth while minimizing risks to economic stability.

PHOTO: FREEPIK

This article was created with AI assistance.