Determinants of Indonesia’s External Debt 31 Years

Abstract

External debt can be used as a source of development in developing countries, including Indonesia. External debt can be affected by various factors. This study aims to determine the short- and long-term relationship between the exchange rate, foreign exchange reserves, and state revenues for Indonesia’s external debt from 1990 to 2021, sourced from the World Bank. The method used in this study is the Error Correction Model (ECM). The results of this study show that the exchange rate in both the short and long term has a significant negative effect on foreign debt. In the short and long term, foreign exchange reserves positively impact external debt. Meanwhile, state revenues in a short time do not affect external debt and have a significant positive effect in the long run. This research can be used as one of the guidelines for determining policies related to foreign debt.