Govt to curb foreign loans<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad told the
\nprivate sector yesterday it must curb the inflow of offshore
\nborrowing because the government is considering revising the
\nexisting ceiling for foreign loans.<\/p>\n
\"As a member of the monetary authority, I am sternly stating
\nthat the private sector must improve the management of their
\nforeign loans and refrain as much as possible from excessive
\namounts of borrowing in order not to put the country's economy at
\nhigh risk,\" Mar'ie told members of the Indonesian Chamber of
\nCommerce and Industry here yesterday.<\/p>\n
The Chamber's members met with more than a dozen ministers led
\nby Coordinating Minister for Economy and Finance Saleh Afiff in a
\nbriefing on the government's draft budget yesterday.<\/p>\n
The draft budget was proposed earlier yesterday by President
\nSoeharto before a plenary session of the House of
\nRepresentatives.<\/p>\n
Mar'ie said that the government needs the involvement of the
\nprivate sector to advance the country's development. \"But, it is
\nour main job to remind them of the borrowing risk due to a
\npossible mismanagement of commercial loans,\" he said.<\/p>\n
\"I even urge Bank Indonesia, the central bank, to impose
\nstrict measures against the domestic borrowers who have failed to
\nsubmit reports on the development of their commercial loans to
\nthe central bank,\" he said.<\/p>\n
Mar'ie did not specify the current position of the private
\nsector's outstanding foreign debt. But, he announced last
\nDecember that the private sector's foreign debt had reached US$36
\nbillion as of the end of September, as compared to $29.54 billion
\nas of June.<\/p>\n
He told a hearing with the House's budgetary commission in
\nDecember that the private sector's debts increased by $6.8
\nbillion during the period between July and September of last
\nyear, while the government's outstanding borrowing fell by almost
\n$3 billion during the same period.<\/p>\n
According to Mar'ie, that the country's total foreign debt
\nstood at $93 billion as of September, of which $56.66 billion was
\nowed by the government and the remaining $36 billion by the
\nprivate sector.<\/p>\n
Governor of Bank Indonesia Soedradjad Djiwandono said
\nyesterday that he was committed to strengthening its control over
\nthe private sector's foreign debt, considering that the sector is
\nexpected to be the backbone of the country's development in the
\nfuture.<\/p>\n
Strict control of commercial loans is essential to maintain
\nthe country's balance of payments at a safe level, he said.<\/p>\n
Ceiling<\/p>\n
Mar'ie also said yesterday that the monetary authority is now
\nconsidering revising the country's existing ceiling on offshore
\nloans. He would not yet reveal any details of the planned
\nrevision of the ceiling.<\/p>\n
The government has thus far set the ceiling on offshore
\ncommercial loans at between $5.6 billion and $6.5 billion. This
\npolicy is to remain in effect until next fiscal year. The annual
\nceilings on foreign loans to the central bank, state banks and
\nprivate banks are set at $500 million, $1 billion and $500
\nmillion, respectively.<\/p>\n
With the existing ceilings, private companies are permitted to
\nborrow up to $2.8 billion from foreign creditors in the current
\nfiscal year and up to $2.9 billion in the next fiscal year, while
\nstate firms may borrow up to $1.4 billion in 1994-95 and up to
\n$1.6 billion in the next fiscal year.<\/p>\n
The Chamber's chairman, Aburizal Bakrie, told reporters after
\nyesterday's meeting he was optimistic that the private sector is
\nnow able to manage its offshore borrowing under a prudential
\nprinciple scheme.<\/p>\n
\"I am personally not worried about the increase in the private
\nsector's foreign loans because our debt service ratio is quite
\ngood,\" he said.<\/p>\n
Hadi Soesastro, an executive director of the Center for
\nStrategic and International Studies, suggested yesterday that it
\nis better for the government to realign its monetary policies,
\nincluding those related to the development of the country's
\ninterest rates and rupiah convertibility. He also advised that
\nthe governemnt tighten its control of inflationary factors,
\ninstead of wasting time managing the private sector's foreign
\nborrowing.(fhp\/hdj)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-curb-foreign-loans-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}