World Bank Warns Indonesia about Ballooning Forex Debts

The World Bank revealed that companies in Indonesia and several other countries in the East Asia and Pacific (EAP) region are vulnerable to currency depreciations. The October 2022 edition of the World Bank's report on the economy of East Asia and the Pacific (EAP) classifies the differences between syndicated loans and bonds from countries in the EAP region. Indonesia is listed as one of the countries with the highest private debt in foreign currencies. The same happened in the Philippines and Vietnam, where debts from syndicated loans are greater than from bonds.

"At least 60 percent of the debts will mature in foreign currencies, so companies in these countries are vulnerable to currency depreciation," the report stated. The World Bank assessed various rollover risks for EAP countries. The volume of syndicated loans and bonds maturing from the non-financial sector in these countries between 2022-2023 is quite large. For example, corporate debts in Malaysia reached about eight percent of its GDP, maturing in 2022-2023. Thailand's debt ratio was around six percent of GDP, while Indonesia's was almost five percent of GDP.