REPUBLIKA.CO.ID, JAKARTA – Indonesian banking’s foreign debt reaches 3.6 billion USD, Bank Indonesia (BI) stated, while the private foreign debt including banking from Europe reached seven billion USD. The exposure of foreign debt or external debt does not significantly affect the weakening of IDR exchange rate. 

“We do not have much external debt,” the Deputy Director of International Department in BI, Tirta Segara, said.

The debt is considerably safe for IDR exchange rate as the value of external debt is the amount of debt which has not yet withdrawn to Europe. The debt is hardly withdrawn as it could become the liquidity in Europe.

The liquidity of foreign exchange (forex) in Indonesia, he continued, would be safer with the agreement of Chiang Mai Initiative (CMI). BI can get liquidity up to 11.9 billion USD from swap mechanism in the agreement.

With ASEAN countries plus Japan, China, and South Korea (ASEAN+3) as the members, CMI is aimed to address balance of payments and short-term liquidity difficulties in the region. So far, BI has not used CMI’s liquidity. 

“We prepare it as a shield,” Segara said.

Withdrawal fund from CMI is still safe for domestic economy as the ratio of Indonesian debt is about 26 percent of Gross Domestic Product (GDP). The maturity of corporate debt made the need of USD increase, the Governor of BI, Darmin Nasution, said. IDR exchange rate is continuously under suppression as the debt maturity in 2012 is bigger than the previous year.

With the repatriation of dividend payment and coupon debt, the need of USD keep increasing while the crisis of European economy makes the investor look for safer place for liquidity.

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