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)