Indonesia will not use foreign exchange reserves<\/p>\n
JAKARTA (JP): Governor of Bank Indonesia (the central bank)
\nSoedradjad Djiwandono stated yesterday that Indonesia will not
\nresort to using its foreign exchange reserves to cover its
\ncurrent account deficit -- expected to reach US$7.9 billion this
\nyear.<\/p>\n
Speaking at a budget briefing for the press on Wednesday
\nnight, the governor said that the deficit can still be offset by
\nofficial and private capital flows.<\/p>\n
\"Official capital flows are estimated at US$5.7 billion and
\nprivate capital flows at US$10.6 billion. So our capital account
\nwill still be in surplus,\" he said, adding that the US$10.6
\nbillion capital flows will be in the form of direct investments
\nportfolio capital.<\/p>\n
Besides, he said, Indonesia also has a stand-by loan of US$2
\nbillion that can be taken at any time needed.<\/p>\n
\"So we don't need to use our foreign exchange reserve to
\nfinance our imports,\" he stressed, at the briefing, which was
\nattended by a number of ministers.<\/p>\n
According to the governor, Indonesia's foreign exchange
\nreserve is now recorded at US$14.5 billion or equivalent to
\nbetween four and five months of imports.<\/p>\n
He pointed out that the foreign exchange holding will not
\ndecrease during the current fiscal year even though the country's
\nforeign debt payments will reach US$6.05 billion, which is higher
\nthan US$5.5 billion during the current fiscal year.<\/p>\n
Indonesia has used part of the funds from the sales of its
\nstate-owned companies' shares -- Telkom and Timah -- to
\naccelerate its foreign debt payments.<\/p>\n
Indonesia's current account deficit could reach US$7.9 billion
\nor 3.8 of the gross domestic product (GDP) during the current
\nfiscal year (April 1995 to March 1996).<\/p>\n
But during the next fiscal year, the deficit is expected to
\ndecrease to US$6.9 billion or 3.1 of the GDP.<\/p>\n
\"To decrease the deficit, we should promote our non-oil
\nexports and reduce unnecessary imports,\" he said.<\/p>\n
According to the governor, non-oil export growth during the
\nnext fiscal year is estimated to reach 19.5 percent, while import
\ngrowth will be cut down to 11 percent.<\/p>\n
\"We're optimistic that we can reduce import growth from 32
\npercent during the current fiscal year to only 11 percent during
\nthe next fiscal year. We know from experience that the government
\ncan do it,\" he stated.<\/p>\n
\"Our debt service ratio (against exports) will decrease from
\n33.7 percent during the current fiscal year to 30.8 percent
\nduring the next fiscal year,\" he said.<\/p>\n
He added that the government will continue to pursue
\nprudential monetary and fiscal policies.<\/p>\n
\"The monetary authorities will strictly control offshore
\nloans, particularly in the private sector,\" he said.<\/p>\n
The government recently issued a number of monetary policies
\nto cool down economic overheating. It increased banks' reserve
\nrequirement from two to three percent, closed non-banking
\nfinancial institutions to new-comers, and tightened control over
\ntheir overseas borrowings. (13)<\/p>",
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