Indonesia's External Debt Shows Significant Decline in Q3 2025

Overview of External Debt Position

Indonesia's external debt decreased to Rp 7,087 trillion (US$ 424.4 billion) in the third quarter of 2025, representing a decline from US$ 432.3 billion in the previous quarter. This movement reflects a 0.6% year-on-year contraction, compared to 6.4% growth recorded in Q2 2025. The reduction was primarily driven by slowing public sector debt growth and a contraction in private sector external debt.

Sectoral Breakdown

Public Sector Debt

The public sector external debt stood at US$ 210.1 billion in Q3 2025, growing at a 2.9% year-on-year rate, significantly slower than the 10% growth observed in Q2 2025. Bank Indonesia attributes this slowdown to reduced foreign investment in domestic government bonds, likely influenced by heightened global financial market uncertainty.

Private Sector Debt

The private sector external debt experienced a contraction during the quarter. This decline contributed to the overall reduction in Indonesia's external debt position.

Policy Response and Monitoring

To maintain a healthy external debt structure, Bank Indonesia and the government continue to strengthen their coordination in monitoring external debt developments. The authorities remain vigilant in managing external debt to ensure it supports national economic stability and growth.

Implications

The decrease in external debt, while positive for debt sustainability, reflects both domestic and international economic conditions. The slowdown in public sector debt growth indicates cautious investor sentiment amid global uncertainties. The government and BI's continued coordination is crucial in maintaining a stable external debt position while supporting economic growth.