Estimate of current account deficit revised upward

Estimate of current account deficit revised upward

JAKARTA (JP): The Indonesian government has revised its
prediction of the current account deficit for the current
(1996/1997) fiscal year upward to US$8.7 billion from an earlier
estimate of $6.9 billion.

"After making new calculations, we must revise our estimate of
the 1996/1997 current account deficit," Coordinating Minister for
Economy and Finance Saleh Afiff told newsmen here yesterday after
a meeting with President Soeharto.

Afiff added that the earlier estimate of the 1996/1997 current
account deficit assumed too low a rise in imports but too high an
increase in exports.

The government previously predicted that during the current
fiscal year exports would grow by 19.5 percent and imports by
only 11 percent.

Previously, the government thought the current account deficit
(the balance of merchandise trade and service transactions) would
decline to $6.9 billion in 1996/1997.

However, the actual current account deficit last fiscal year
was only about $7 billion, much lower than the $7.9 billion
originally estimated.

Afiff also noted that the economic overheating is continuing
and the inflation rate cannot be kept within the target of five
percent.

President Soeharto, according to Afiff, called for more
concerted efforts to bolster exports and reaffirmed that
continuing the current prudent fiscal and monetary policies was
imperative.

Deregulation

"We're preparing a new deregulation package, scheduled to be
launched next month, and we hope it will further boost our
exports," he said.

The President, he added, also ordered that foreign debt
repayments be accelerated to reduce the debt service burden.

Afiff noted that the proceeds from the forthcoming
privatization of several more state enterprises would be used to
pay foreign debts off early, particularly those bearing high
interest rates.

Currently, Indonesia's foreign debts are estimated at about
$100 billion, with some $63.5 billion of that in public debts.

Saleh said that the government expects the Consultative Group
on Indonesia (CGI) -- the country's creditor consortium -- which
will hold its annual meeting in Paris on June 18-20, to pledge
new loans at least equivalent to the $5,36 billion they committed
last year.

Afiff added that the government would strictly maintain the
ceilings on new offshore commercial borrowings by state companies
and for government projects.

For the current 1996/1997 fiscal year, the ceiling on
commercial borrowings for government projects was set at $800
million, for those by state banks at $500 million, while export
credits were set at $1 billion. (13/vin)