RI commits to servicing foreign debt<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad reaffirmed
\nyesterday the government's strong commitment to meeting all its
\nforeign debt obligations on schedule despite the rupiah's sharp
\ndepreciation.<\/p>\n
\"We even intend to continue amortizing the high interest-
\nportion of our debts ahead of their maturity dates as we have
\ndone in previous fiscal years,\" Mar'ie told the House of
\nRepresentatives.<\/p>\n
He told the House Budgetary Commission the government would do
\nits best to prevent its short-term debts from default.<\/p>\n
He acknowledged that Indonesia's foreign debts were increasing
\nin rupiah terms and foreign debt servicing would be larger than
\nthat stated in the current budget.<\/p>\n
Latest official estimates put the government's foreign debts
\noutstanding as of March at US$53.3 billion.<\/p>\n
In the 1997\/1998 fiscal year, the government budgeted Rp 19.57
\ntrillion (US$6.7 billion) in amortization and interest payments
\nfor its foreign debts.<\/p>\n
In the past, the government's annual debt servicing stood at
\n$8 billion.<\/p>\n
Indonesia's debt servicing has been decreasing in dollar terms
\nas the government repaid some of its high-interest debts ahead of
\nschedule.<\/p>\n
In the 1994\/1995 to 1996\/1997 fiscal years, the government
\nrepaid $2.6 billion in long-term, fixed high-interest foreign
\ndebts ahead of schedule, saving the government $1.45 billion in
\ninterest payments.<\/p>\n
Such early repayments of debts were funded by budget surpluses
\nand proceeds from the initial public offerings by state
\nenterprises.<\/p>\n
Mar'ie said the early repayment of high-interest debts would
\nimprove creditors' confidence in the country and reduce the
\ngovernment's debt servicing burden.<\/p>\n
Despite the increasing foreign debt servicing in rupiah terms,
\nMar'ie said the government would do its best to avoid deficit
\nfinancing by adjusting its spending to the expected decline in
\ntax receipts.<\/p>\n
\"Therefore, there will be some changes (in the current
\nbudget),\" Mar'ie said without elaborating.<\/p>\n
Many have forecasted that the domestic revenue from taxes will
\ndecline as corporate profits are projected to drop due to the
\nweakening of the rupiah and the credit crunch imposed to cope
\nwith the currency turmoil.<\/p>\n
\"For that reason, we have been pursuing and economizing (in
\nour spending) to save our budget,\" Mar'ie said.<\/p>\n
He said what Indonesia was experiencing now was not an
\neconomic crisis but a currency crisis, which also befell other
\nregional currencies.<\/p>\n
\"Therefore, the government needs to address it as quickly as
\npossible so that it doesn't drag on and have more devastating
\nimpacts on the economy,\" Mar'ie said.<\/p>\n
In a bid to boost confidence in the rupiah, the government
\nmoved last week to revise its budget, liberalize foreign
\npurchases of shares, strengthen the banking industry and raise
\nthe luxury sales tax on several goods.<\/p>\n
A special ministerial team is reviewing development projects,
\nparticularly those with high import content, for rescheduling or
\npostponement.<\/p>\n
State Minister of Research and Technology B.J. Habibie said at
\na separate House hearing that the government would not reschedule
\nstrategic industry projects.<\/p>\n
He contended that projects like aircraft development by state-
\nowned PT IPTN in Bandung would continue as they were long-term
\nprojects which, if postponed, would undermine their viability.<\/p>\n
\"There is no ground at all to stop or postpone projects which
\nwere planned 20 years ago just because of monetary volatility,\"
\nHabibie said.<\/p>\n
He said IPTN's latest commuter turboprop N-250 had drawn a lot
\nof interest from potential buyers.<\/p>\n
\"If orders for N-250 continue to flow in, IPTN will one day be
\nable to produce one aircraft per day,\" he said.<\/p>\n
\"If we stop the project in this situation, wouldn't it become
\nsuperfluous? That's what we should be aware of,\" Habibie said.<\/p>\n
He said projects which had just started could be postponed but
\nshould not be canceled if they would benefit the country's
\neconomy in the long run. (amd\/rid)<\/p>",
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