BI predicts foreign debt repayment $8.9b in Q1

BI predicts foreign debt repayment $8.9b in Q1

The Jakarta Post, Jakarta

Some US$8.9 billion in both private and public foreign debt repayment looms on the fragile rupiah during the first quarter of this year, according to Bank Indonesia.

Foreign debt pressure from principal and interest repayments would grow to $10 billion in the second quarter, Bank Indonesia was quoted as saying by Dow Jones on Monday.

That burden would tail off to about $5.8 billion in the third and fourth quarter as corporate debt repayments drop.

Private debts will dominate foreign debt repayment this year with $19.5 billion. Of that amount, $8.6 billion is owned by foreign-based firms, Bank Indonesia said.

In the absence of fresh foreign direct investment the first two quarters could spell gloom for the fragile rupiah.

The local unit has so far found solace from the inflow of foreign capital into the stock market, which Minister of Finance Boediono said was encouraging on Monday.

This has helped the rupiah maintain a relatively stable trading band of 10,100 to 10,500 against the U.S. dollar amid dropping support from Bank Indonesia's interest rates.

The central bank has lowered its benchmark rates since early this year, aiming for an annual average of 14 percent, from around 15 percent last year.

Bank Indonesia said last week the rupiah could reclaim the 9,000 territory if the government successfully divests a 51 percent stake in Bank Central Asia (BCA).

The high profile sale could entice foreign investment to the country, added Bank Indonesia deputy governor Miranda Goeltom.