$340m of govt debts to be rescheduled
$340m of govt debts to be rescheduled
JAKARTA (JP): The steering committee at the London Club of
commercial banks has approved the Indonesian government's
proposal to reschedule around US$340 million of debt falling due
through March 31, 2002, Bank Indonesia deputy governor Dono
Iskandar Djojosubroto said on Tuesday.
Dono said in a statement that under the terms of the proposal,
the extended principal maturities would be repaid over a period
of 12-and-a-half years from their originally scheduled payment
dates.
"In order to make the proposed rescheduling effective, the
consent of all of the lenders under the two loan agreements will
be required," said Dono, who represented the government in the
negotiations with the club's five-member steering committee.
"The extension of the maturities of Indonesia's external debt
builds on the success of our Paris Club rescheduling, and will
provide critical support to Indonesia's far-reaching efforts to
restructure the country's external indebtedness while
strengthening Indonesia's balance of payments position," he
added.
The government and the Paris Club of 19 sovereign creditors
agreed in April that some $5.8 billion of debts would be
rescheduled to between 11 and 20 years.
Some $2.1 billion of the rescheduled debts were supposed to
fall due this year, and the remaining in 2001 and 2002.
The London Club is an informal body that brings together
commercial banks to discuss the rescheduling mechanism for
distressed debt. It normally meets once the Paris Club has
reached an agreement.
Bank Indonesia officials have said that the rescheduling deal
with the London Club was based on a comparative study of the
Paris Club deal, because it was a custom that all creditors be
treated equally.
A source at Bank Indonesia said that the $340 million debt was
a part of the standby loans signed by the government in 1994 and
1995 with overseas commercial banks to safeguard the country's
balance of payments.
The source said that around $70 million of the debts were due
to be repaid this year, and the remainder in 2001 and 2002.
Dono said that the five-member steering committee of the
London Club considered the proposed rescheduling a constructive
basis for the resolution of Indonesia's external commercial debt
difficulties.
He said that the steering committee included the Bank of
Tokyo-Mitsubishi Ltd., BNP Paribas, the Chase Manhattan Bank,
Commerzbank AG and the Industrial Bank of Japan Ltd.
The Bank Indonesia source said that most of the government's
commercial debts were owed to Japanese creditors.
The government was forced to seek debt rescheduling
alternatives after the country plunged to its worst economic
crisis in three decades.
The debt rescheduling would greatly ease the pressure on the
state budget, which is already overburdened by the huge cost of
financing the bank recapitalization program and providing
subsidies for the poor. (rei)