Private sector owes $29b by April 1999<\/p>\n
JAKARTA (JP): Indonesia's private sector foreign debt due this
\nfiscal year, including that owed by commercial banks, totals
\nUS$29.2 billion, Coordinating Minister for Economy, Finance and
\nIndustry Ginandjar Kartasasmita said yesterday.<\/p>\n
Speaking to journalists after meeting President B.J. Habibie,
\nGinandjar said external corporate debt stood at US$20 billion and
\nthe non-trade liabilities of commercial banks at $9.2 billion.<\/p>\n
"Hence, last week's agreement to reschedule the foreign debts
\nfor up to eight years, including three years of grace period,
\nwould be quite a relief.<\/p>\n
"If we (our companies) have to repay entirely these $30
\nbillion debts, it would be quite a pressure on our balance of
\npayments because that amount is more than twice as large as our
\nforeign exchange reserves", Ginandjar added.<\/p>\n
Ginandjar, along with Director General of Financial
\nInstitutions Glenn Yusuf, Bank Indonesia Director Dono Iskandar
\nand Indonesian debt settlement team chairman Radius Prawiro, met
\nwith Habibie to report about an agreement with creditors to
\nrestructure the country's mounting private foreign debt.<\/p>\n
Indonesia and its creditor banks agreed in Frankfurt last week
\non a program relating to private corporate debt, external credits
\nto the Indonesian banking system and trade finance.<\/p>\n
The corporate debt arrangements envisaged the creation of the
\nIndonesian Debt Restructuring Agency (INDRA), fully backed by the
\nIndonesian government and administered by the central bank, Bank
\nIndonesia.<\/p>\n
INDRA will provide exchange-rate risk protection and
\nassurances as to the availability of foreign exchange to private
\ndebtors that agree with their creditors to restructure their
\nexternal debt for a period of eight years, with three years of
\ngrace during which no principle will be payable.<\/p>\n
"The immediate benefit from the debt rescheduling agreement is
\nthat our balance of payments, which has been under severe
\npressure so far, will be given a chance to breathe," Ginandjar
\nsaid.<\/p>\n
However, he could not predict how many debtors and creditors
\nwould join the INDRA program as participation in INDRA was
\nvoluntary and would require the consent of both debtors and
\ncreditors.<\/p>\n
Debtors and creditors could still negotiate to find the best
\nsolutions for them. But if they could not reach an agreement,
\nthey could join INDRA. The creditors could also demand the
\ndebtors be liquidated.<\/p>\n
"So, if they can get a better deal, please go ahead. They
\ncould work it out outside INDRA. But if not, they should join
\nINDRA arrangement," Ginandjar said.<\/p>\n
Radius explained that participants in INDRA will be entitled
\nto purchase U.S. dollars at the best real 20-day average market
\nexchange rate from August 1 until June 30, 1999.<\/p>\n
The debtors would be able to repay their debt in rupiah to
\nINDRA at a set interest rate for eight years and Indra would
\nrepay the debt to the lenders.<\/p>\n
Dono predicted that the rupiah would start to strengthen when
\nthe program becomes operational on August 1 as demand for dollars
\nshould drop.<\/p>\n
"The current (dollar-rupiah) exchange rate is still too high
\nbecause demand for dollars and other foreign exchange are still
\nincreasing due to our huge debts.<\/p>\n
"But when debtors and creditors agree to restructure their
\ndebts, according to the INDRA scheme, the demand for dollars will
\ndrop, and the rupiah should strengthen," Dono added. (prb\/rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/private-sector-owes-29b-by-april-1999-1447893297",
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