Indonesia is routinely listed among the World Bank’s largest borrowers, second only to India in some recent tallies, reflecting an outstanding balance with the Bank running into the tens of billions and placing Indonesia among the institution’s top 10 debtors, FDI Intelligence reports. Such ranking is less a rebuke than a symptom: Indonesia’s sheer scale, a population approaching 275–280mn, makes it a natural, persistent client for multilateral finance to underwrite roads, ports, health and education.

Debt dynamics, external exposure

That borrowing sits alongside a broader external-debt stock that has grown sharply. External liabilities were reported at roughly $430.4bn in Q1 2025, with a large share classified as long-term, an exposure that leaves Indonesia vulnerable to swings in global rates and capital flows. A report by local public bank BCA reveals that public-debt ratios have edged higher in recent years; World Bank analyses and national reporting point to government-debt ratios near the 39–40% of GDP mark in 2024–25, a level well below legal limits but high enough to constrain fiscal manoeuvre during shocks, World Bank’s official data shows.

Multilateral loans have financed Indonesia’s rapid infrastructural expansion and social programmes since the Asian Financial Crisis and through the pandemic. World Bank and partner funding remains critical to sustaining services for millions and to closing infrastructure gaps that private capital alone will not fill. That dependence, however, creates policy trade-offs: borrowing to invest raises growth potential, but it also lengthens the maturity ladder that the country must manage if external conditions tighten.

The green transition

The financing question becomes existential when applied to climate. Indonesia is both a major emitter (chiefly from coal and land-use change) and highly climate-vulnerable: coastal cities, agriculture and forests face mounting risk. The Just Energy Transition Partnership (JETP), a headline instrument to accelerate power-sector decarbonisation, is built around roughly $20–21.6bn of pledged financing to shift the power mix and retire coal capacity. Those commitments, led by multilateral lenders and donor governments, transform climate policy from ambition into deliverable projects, Reuters reports.

Yet pledges are not delivered. Recent reporting has flagged gaps between headline JETP pledges and actual disbursements, while the departure of a major donor complicates the picture and raises questions about how much concessional finance will be available at scale and on favourable terms. The result: Indonesia must weigh the risk that debt-funded green projects, necessary for resilience, as Reuters reported it could exacerbate fiscal strain if concessional flows slow or private capital is reluctant to accept transitional risks.

Debt as a bridge

For Indonesia, the policy imperative is clear. First, maximise concessional and blended finance for green investments so that the fiscal burden remains manageable. Second, strengthen domestic revenue mobilisation to reduce overreliance on external borrowing. Third, prioritise projects with robust returns (grid upgrades, geothermal, transmission) that can catalyse private capital and jobs. Finally, push for predictable multilateral disbursements and clear conditionality that unlock finance without imposing undue macro risk.

Being a top World Bank debtor is not a handicap in itself; it is a reflection of Indonesia’s development needs, but it does sharpen the stakes of the green transition. The way Indonesia manages multilateral finance over the next five to ten years will determine whether borrowing becomes a bridge to resilient, low-carbon growth or a liability that deepens vulnerability in a warming, volatile global economy. The practical test is immediate: convert pledges into projects that protect both people and balance sheets.