BI sees stronger rupiah on Paris Club debt restructuring deal
BI sees stronger rupiah on Paris Club debt restructuring deal
The Jakarta Post, Jakarta
Bank Indonesia said the rupiah would strengthen if
creditor nations under the Paris Club agreed to defer debts of
some US$5.5 billion from Indonesia's state budget until the end
of 2003.
"Paris Club, further steps in privatization and Bank Niaga,"
said Bank Indonesia governor Sjahril Sabirin when asked what
would drive the rupiah higher in the coming days.
Indonesia will meet next week with its sovereign creditors in
the Paris Club, to seek the rescheduling of $5.5 billion in debts
maturing between April 2002 and December 2003.
Deferring payment on the debts would lift pressure on the
rupiah, which despite recent gains remains vulnerable on high
dollar demand to pay off corporate foreign debts.
The rupiah has advanced recently due in part to news
that some creditors will support Indonesia's request to
reschedule the debts during the meeting.
"If (Finance minister) Boediono showing optimism is enough to
lift the rupiah, it will be even more so if it (a Paris Club
deal) can be realized," Sjahril said.
Another factor behind the rupiah's recent gains is the sale of
several state assets to foreign firms.
Further cementing confidence in the currency, the government
said its privatization program won legislators' approval despite
growing labor protests.
Twenty-five state firms, some of which analysts say are likely
to attract foreign investors, are scheduled for privatization
this year.
The privatization program has gained momentum since last
year's sale of an 11.9 percent stake in local phone operator PT
Telkom through the stock market to foreign investors.
Telkom's sale earned the government about $300 million, and
enticed wary investors to reconsider buying Indonesian assets.
The government now plans to sell Bank Niaga in June, hoping to
capitalize on the momentum of last month's sale of Bank Central
Asia to a U.S. investment firm.
Recent sales of state assets also have improved Indonesia's
chances of obtaining its next loan tranche worth $400 million
from the International Monetary Fund.
The fund's board of executives will meet in mid-April to
review the progress of Indonesia's economic reform, before
deciding whether to approve the disbursement of the loan tranche.
A visiting member of the board indicated last week a loan
disbursement could be imminent, helping to keep the market upbeat
on the rupiah.
The local currency received another boost after Telkom
announced on Wednesday it had sold a 12 percent stake in its
cellular unit, PT Telkomsel, to Singapore Telecommunications Ltd.
It said the sale was worth $429 million.
News of the deal spurred renewed dollar selling on Thursday,
pushing the rupiah to end trading at 9,675 against the dollar
from 9,800 in the previous day.