Govt considering global bond issue next year<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Minister of Finance Boediono said on Thursday the government was
\nconsidering issuing sovereign bonds next year, as an alternative
\nsource of funding to help finance the 2004 state budget.<\/p>\n
\"That's an option that we are now still studying, there is no
\ndecision as yet,\" Boediono said on the sidelines of a hearing
\nwith the House of Representative budget commission to discuss the
\ngovernment's preliminary draft of the 2004 state budget.<\/p>\n
Boediono said that the government would need to explore as
\nmany potential sources as possible for next year's budget
\nfinancing, especially to help cover the deficit which has been
\nearmarked at 1 percent of the country's gross domestic product
\n(GDP).<\/p>\n
The bond issue would be considered along with other options to
\nfinance the budget, which include optimizing potential revenue
\nfrom both domestic sources, such as divestment and privatization,
\nand foreign sources including seeking further soft-term loans
\nfrom the Consultative Group on Indonesia (CGI) and a debt-swap
\narrangement with other creditor nations, he added.<\/p>\n
Bank Indonesia senior deputy governor Anwar Nation welcomed
\nthe government's possible move to issue the global bonds, saying
\nit was a feasible option.<\/p>\n
When asked if the bonds would only increase the country's
\ndebt, Anwar said: \"There is nothing wrong with foreign debt, what
\nmatters the most is how the money from the debt is spent. In the
\npast, we used the money from foreign loans for non-productive
\npurposes.\"<\/p>\n
Should the plan materialize, which would be the first time
\nsince the financial crisis, it is expected that the bonds will be
\nattractive to international investors, given the country's
\ncurrent stability in its macroeconomic indicators.<\/p>\n
The stable rupiah, a manageable inflation and a declining
\ntrend in the central bank's benchmark interest rate would all
\nserve as sweeteners for investors.<\/p>\n
Unlike previous years, the government will face a much tougher
\ntask in financing the budget as it may not be able to rely on
\ndebt rescheduling facilities from the Paris Club and London Club
\nin view of a possible termination of the current International
\nMonetary Fund (IMF) program by the end of this year.<\/p>\n
In the past, the government could always pin its hopes for
\ndebt rescheduling on the creditor groupings, which had greatly
\nhelped reduced government expenditure.<\/p>\n
But the Paris Club and London Club require that Indonesia
\nimplement the IMF-sponsored program to be eligible for the debt
\nrescheduling facility.<\/p>\n
With an end to such facilities appearing very likely, the
\ngovernment will lose out on around US$3 billion in funds which
\nwould be otherwise available with the presence of the IMF.<\/p>\n
Further pressure would also come from the Rp 24.7 trillion in
\npublic debts due during the year.<\/p>\n
The 1 percent deficit was presented by the government on
\nWednesday to the House, along with other preliminary assumptions,
\nincluding a 4 percent to 5 percent economic growth rate and a 7
\npercent to 8 percent inflation rate.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-considering-global-bond-issue-next-year-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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