Govt sees debt service ratio up to 49.3 percent<\/p>\n
JAKARTA (JP): The government expects the ratio of serviced
\nforeign debt to exports to reach an alarming level of 49.3
\npercent in the current fiscal year that ends in March, Minister
\nof Finance Bambang Subianto said on Tuesday.<\/p>\n
\"Our debt service ratio in the 1998\/1999 fiscal year is
\nestimated at 49.3 percent,\" Bambang said in a written reply to a
\nquestion posed by legislator Thomas Suyatno.<\/p>\n
The response was distributed during a hearing between the
\nfinance minister and the House of Representatives' Commission
\nVIII for finance and the state budget.<\/p>\n
The figure was based on forecasts on the principal and
\ninterest payment of the sovereign and private debt amounting to
\nUS$27.19 billion this year and the total predicted export
\nearnings of $55.16 billion<\/p>\n
This estimate was higher than the government's earlier
\nprojection.<\/p>\n
In September, Coordinating Minister for the Economy, Finance
\nand Industry Ginandjar Kartasasmita said the government saw the
\ndebt service ratio for the current fiscal year at 44 percent.<\/p>\n
Before the economic crisis, which has seen the rupiah sink by
\nmore than 60 percent in value against the U.S. dollar since July
\n1997, the country's debt service ratio stood below 35 percent.<\/p>\n
Thomas said the government should boost exports to bring down
\nthe debt service ratio.<\/p>\n
Increasing exports is one of the only two approaches the
\ngovernment could take in response to the alarming debt level. The
\nother is delaying the debt repayment.<\/p>\n
\"I don't think the government would delay the debt repayment,
\nit would rather boost exports,\" he said.<\/p>\n
At a hearing with the commission on Monday, the director
\ngeneral of budget affairs at the Ministry of Finance, Darsjah,
\nsaid the government would not write off its sovereign loans, to
\nmaintain healthy relations with the country's foreign debtors.<\/p>\n
\"We have not considered a debt write-off... if we did, we
\nwould risk having the loans for our ongoing projects stopped,\"
\nDarsjah said.<\/p>\n
This means boosting exports is the only way to reduce the debt
\nservice ratio.<\/p>\n
Indonesia has not benefited from higher export revenues this
\nyear because of trade financing troubles, despite the rupiah's
\nsignificant plunge which normally would make exports more
\ncompetitive.<\/p>\n
Export-oriented firms, especially those highly reliant on
\nimported materials, have been facing difficulties securing
\nletters of credit to import raw materials because of the low
\nconfidence in the local banks.<\/p>\n
The rupiah's sharp depreciation has also boosted the prices of
\nimported products.<\/p>\n
The government has pledged to help export-oriented firms by
\nestablishing an Export Financing Institution to handle all issues
\nregarding trade financing.<\/p>\n
According to official data, total exports reached $37.24
\nbillion during the January-September period, a 5.73 percent
\ndecline from the same period of 1997. The drop was mainly in the
\noil and gas sector, as non-oil exports rose slightly, by 1.5
\npercent.<\/p>\n
Imports dropped even more, by 36.6 percent, during the period
\nto $20.15 billion, resulting from a sharp fall in oil and gas
\nimports. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-sees-debt-service-ratio-up-to-493-percent-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}