`House to hear global bond plan in August'<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government is to unveil its planned sovereign bonds issue in
\nAugust, when President Megawati Soekarnoputri presents the 2004
\nstate budget draft to the House of Representatives, Minister of
\nFinance Boediono said on Friday.<\/p>\n
\"It (the bonds issue) is part of the draft budget. In August,
\nwe'll submit it to the House of Representatives, and then we'll
\nwait for an agreement (from the lawmakers),\" Boediono told
\nreporters.<\/p>\n
Based on preliminary figures, the bonds issue is likely to be
\nworth around US$400 million, but the final figure should await
\napproval from the House, he said.<\/p>\n
The government is planning to issue bonds on the international
\nmarket next year as an alternative source of funding to help
\nfinance the 2004 state budget deficit, projected at around 1
\npercent of the country's gross domestic product (GDP).<\/p>\n
Some analysts have predicted the bond issue, a first since the
\n1997-1998 financial crisis, would be attractive in the eyes of
\ninternational investors, given the country's newfound
\nmacroeconomic stability.<\/p>\n
A stronger rupiah, benign inflation and declining trend in the
\ncentral bank's benchmark interest rate have managed to improve
\nthe country's sovereign ratings.<\/p>\n
In 1996, Indonesia issued $400 million worth of Yankee bonds.<\/p>\n
The government is making strenuous efforts to seek as many
\nsources of funds as possible to fill the deficit, particularly in
\nlight of the government's ending the current International
\nMonetary Fund (IMF) program in December. Exiting the IMF program
\nwill make the country ineligible for the debt rescheduling
\nfacility from the Paris Club of creditor nations and the London
\nClub of private creditors, and the government will have to fully
\nrepay maturing sovereign debts.<\/p>\n
Additional pressure will come from a maturing government
\ndomestic debt, estimated at Rp 24.7 trillion for next year alone.<\/p>\n
Boediono said the government would need to make thorough
\npreparations for the bond issue to avoid unexpected outcomes.<\/p>\n
\"We're very careful about reentering the international market.
\nWe must be successful. We need to be well-prepared for this, then
\nenter the market,\" he said, without elaborating the kinds of
\npreparation the government was currently undertaking.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti said earlier that the government must work hard to improve
\nthe country's rating to minimize the cost in issuing sovereign
\nbonds.<\/p>\n
He said the government would be forced to pay a high interest
\nrate for the bonds if its current rating of below-investment
\ngrade was not improved.<\/p>\n
Standard & Poor's has given Indonesia a B-minus sovereign
\nrating, while its investment grade rating is two notches higher
\nat triple-B.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-to-hear-global-bond-plan-in-august-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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