In a landmark move that signals progress toward regional financial stability, the Asian Development Bank (ADB) and the Ministry of Finance of the Republic of Indonesia have completed the conversion of 27 sovereign loans — valued at a total of $3.3 billion — from US dollars and Japanese yen into the Indonesian rupiah. The initiative represents ADB’s first large-scale local currency loan conversion and is expected to pave the way for similar transactions across Asia and the Pacific.
This milestone is aligned with ADB’s broader strategy to promote sustainable debt management and deepen local currency markets in the region. The successful currency conversion reflects the evolving dynamics of development finance, especially as countries seek to mitigate the risks associated with foreign exchange volatility and rising external debt burdens.
Roberta Casali, ADB Vice-President for Finance and Risk Management, highlighted the significance of the achievement: “This successful conversion of Indonesian sovereign loans into local currency is a testament to ADB’s commitment to financial innovation and stability in the region. It is the result of our long-standing partnership with the Indonesian Ministry of Finance in the area of debt management. By optimizing currency management, we are helping our member countries achieve more sustainable and resilient economic growth.”
From Indonesia’s perspective, the conversion is a vital step toward improving fiscal efficiency. Vice Minister of Finance Thomas A.M. Djiwandono emphasized the benefits of the initiative: “With debt conversion, we can lower our financing costs and minimize financial uncertainty, which in turn provides greater fiscal space to address other pressing needs.”
This transaction is part of ADB’s broader effort to enhance local currency financing tools throughout Asia and the Pacific. Over recent years, the institution has been at the forefront of developing local currency bond markets and supporting the creation of derivative instruments to hedge financial risks. As of April 30, 2025, ADB’s aggregate local currency portfolio stood at over $5 billion equivalent.
The bank’s commitment to expanding this portfolio is evident, with local currency loans now accounting for more than one-third of ADB’s private sector outstanding loans. This proportion is projected to rise to over 50 percent in the coming years, further embedding local currency financing into ADB’s operational strategy.
Founded in 1966 and owned by 69 member countries — including 50 from within the Asia-Pacific region — the Asian Development Bank remains a key multilateral institution dedicated to inclusive and sustainable development. By fostering strategic financial partnerships and deploying innovative tools like local currency loans, ADB continues to help its member nations manage economic vulnerabilities, improve infrastructure, and build long-term economic resilience.
This recent achievement with Indonesia not only strengthens the country’s debt sustainability but also serves as a model for other developing economies aiming to reduce reliance on foreign currencies and build more robust financial systems.