Govt ready to cover maturing bonds: Boediono<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The government would use part of the proceeds from the sale of
\nassets by the Indonesian Bank Restructuring Agency (IBRA) to
\ncover bonds worth Rp 3.9 trillion (about US$415 million) maturing
\nin July, Minister of Finance Boediono said on Friday.<\/p>\n
He said that the agency had collected enough funds to cover
\nthe payment of the maturing bonds.<\/p>\n
\"I don't know the exact number, but Pak Ritonga told me that
\nthe amount is enough,\" Boediono told reporters referring to the
\nstate budget director general Anshari Ritonga.<\/p>\n
Boediono made the statement after the House of Representatives
\nbudget committee rejected on Thursday the government's proposal
\nto use excess funds from the 2000 state budget to cover the
\nmaturing bonds, which reports said were being held by Bank
\nCentral Asia (BCA).<\/p>\n
The government injected some Rp 430 trillion worth of bonds
\ninto ailing banks in the late 1990s to recapitalize them.<\/p>\n
Boediono's remarks should also provide a relief to banks
\nholding the bonds that the government would not roll-over the
\nbonds.<\/p>\n
IBRA has been targeted to rake in some Rp 35 trillion in cash
\nthis year from the sale of its various assets taken over from
\nailing banks and indebted bank owners.<\/p>\n
The cash is supposed to finance the state budget deficit,
\nestimated at around Rp 42 trillion. The government is also
\nexpecting some 6.5 trillion in proceeds from the privatization
\nprogram.<\/p>\n
The move by the government to use part of the IBRA asset sale
\nproceeds to cover maturing bonds means that the agency would have
\nto raise a greater amount of cash this year, thus putting greater
\npressure on it for a fire sale, selling the assets at huge
\ndiscount.<\/p>\n
Initially, the government planned to issue the so-named T-
\nbills to replace the maturing bonds.<\/p>\n
However the efforts turned sour as the House indicated it
\ncould not approve the sovereign debt securities law, which will
\nserve as a legal basis for the issuance of the T-bills, before
\nJuly.<\/p>\n
T-bills is another kind of short-term bonds with maturity
\nperiod of between 6 months and a year.<\/p>\n
The issuance of T-bills should be critical in securing the
\ncountry's fiscal sustainability in the long run. A large portion
\nof the bank recapitalization bonds will start maturing in 2004,
\nall the way to 2009.<\/p>\n
Analysts said that the country is facing a risk of fiscal
\ndisaster if the government fails to seek measures to resolve its
\nhuge domestic debt problem.<\/p>\n
For 2003, the amount to be matured will increase to around Rp
\n25 trillion.<\/p>\n
The figure will get bigger and bigger in years to come,
\nreaching its peak in 2009 when the government will have to cover
\nthe redemption of around Rp 100 trillion in maturing bonds.<\/p>\n
This huge public debt faced by the government has been a hot
\ntopic lately, especially when the government so far has failed to
\ndeliver a convincing way to manage and restructure these debts.<\/p>\n
Huge allocation for debts payments that the state budget has
\nto allocate each year has limited the portion of spending for
\ndevelopment programs.<\/p>\n
The state budget this year has to allocate Rp 60 trillion for
\nthe recap bonds interest payment, or make up of some 73 percent
\nof the this year's payment for debts.<\/p>\n
The country's total debts to December last year stood at
\n$134.8 billion, or more than 80 percent of predicted GDP of $160
\nbillion.<\/p>\n
GDP measures total value of goods and services produced in a
\nyear.<\/p>",
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"sponsor": "Okusi Associates",
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