BI says foreign debts reach $109.3 billion

JAKARTA (JP): Bank Indonesia, the central bank, reported last week that Indonesia's offshore debts were US$109.3 billion as of last March, while foreign exchange reserves increased to $19.9 billion.

The bank's 1996/1997 annual report showed that private foreign debts rose to US$56 billion, surpassing for the first time the government's foreign debts which dropped to $53.3 billion, from $54.6 billion as of last November.

"The appreciation of the U.S. dollar against the Japanese yen and relatively low international interest rates has helped reduce Indonesia's foreign debts," the central bank said.

The dollar was worth about 100 yen in December 1995 after dipping to its lowest level, about 80 yen, several months before. The dollar continued to recover, and was worth 123 yen on March 31, this year.

During the last fiscal year, international interest rates remained relatively low, with U.S. Federal Reserve fund rates at 5.5 percent, and London Inter-Bank Offered Rates and Singapore Inter-Bank Offered Rates both below 6 percent.

The country's debt to service ratio -- the ratio of foreign debt servicing to export revenue -- was 34.2 percent, with the public sector accounting for 14.6 percent and the private sector 19.6 percent.

The government wants to reduce the country's debt service ratio to a healthy 25 percent by 1999.

The government has reduced its foreign debts by early repayment of its high-interest debts.

The government said early this year that it had repaid $2.6 billion in foreign debts ahead of schedule since the 1994/1995 fiscal year, saving $1.45 billion in interest payments.

Bank Indonesia said the government would continue to direct private debts to finance productive sectors or export-oriented sectors.

It has required local commercial banks to allocate 80 percent of their offshore debts to finance export-oriented sectors.

In addition, the government will also continue to urge private borrowers to get the best terms when they raise funds overseas.

"The government's Yankee bond issued in July 1996 serves as a benchmark to help the private sector get better terms when it raises funds overseas," the report said.

The central bank also reported that the country's official foreign exchange reserves reached $19.9 billion in March--the end of the 1996/1997 fiscal year -- which were enough to finance 5.2 months of imports. The reserves represented an increase from the $16 billion recorded in March 1996.

Foreign exchange reserves increased due to the increasing inflow of funds which were larger than the country's current account deficits.

Net capital inflow was $11 billion last fiscal year, down from 11.5 billion in the previous fiscal year.

Net private inflow stood at $11.8 billion, of which $6.5 billion was from foreign direct investment and $5.2 billion from other sources, mostly loans.

But the public sector, or the government, recorded a deficit of $800 million in the capital account. It received loans of $5.4 billion, but paid out $6.2 billion for amortization and early repayment of foreign debts.

The current account deficit was $8.1 billion -- below the government's earlier projection of $8.8 billion.

The country recorded a trade surplus of $6.3 billion last fiscal year. But the deficit in services rose to $14.4 billion, mostly coming from freight ($4.6 billion) and foreign debt interest payment ($6.3 billion). (rid)