Foreign debts fall by 6% in three months
Foreign debts fall by 6% in three months
JAKARTA (JP): Indonesia's outstanding foreign debts dropped nearly six percent within three months, from US$93 billion in September 1994 to $87.6 billion last December.
Minister of Finance Mar'ie Muhammad said here yesterday that approximately $58.6 billion of the outstanding loans recorded as of last December were owed by the government, and the remaining $29 billion by private and state-owned companies.
As of last September, the outstanding loans held by the government and the private sector, including state firms, reached $56.66 billion and $36 billion, respectively.
Speaking at a hearing with the Budgetary Commission of the House of Representatives, the minister said the government is committed to further reducing external debt in the future.
He said the country's debt service ratio (DSR) in the current 1994-95 fiscal year is estimated at 32 percent -- consisting of 19 percent for government loans and 13 percent for private and state companies.
"Our target is to reduce the DSR to 20.6 percent at the end of the sixth Five Year Development Plan (Repelita VI) period (in 1998-99). We should firmly stick to this target," he told the commission.
The minister said that the government's programs in reducing the foreign debt will include an emphasis on the promotion of export activities and the creation of a business climate more conducive to both domestic and foreign investments.
Such efforts are expected to further push down the DSR to below 20 percent by the end of the current Repelita VI period, which began in April last year, the minister said.
The finance minister said that offshore borrowings by private and state-owned companies would also be tightened as part of their strategy to alleviate the foreign debt burden.
Approval
State-owned companies and other government institutions, for example, will have to ask for special approval from the Offshore Borrowing Supervision Team before raising loans abroad, he said.
"Private firms do not have to pass such a procedure. But, instead, they will have to report their borrowing to Bank Indonesia," he said.
The government will also begin selling its shares in state- owned companies to further reduce the debt burden.
Around $799 million raised from the sales of state-owned Indosat shares on the New York Stock Exchange (NYSE) were used to pay off some of the government's high-interest loans.
Indosat, the provider of international telecommunication services, raised the funds when it sold 25 percent of its 1.03 billion ordinary shares through the NYSE in October and around Rp 650 billion ($297 million) from the sale of another 10 percent of its shares on the local market.
The shares sold through the NYSE were government shares while those sold at home consisted of new shares.
The minister said yesterday that the privatization of state- owned companies will continue in order to raise funds for the pre-payment of the government's debts carrying interest rates of above 11 percent.
Three major state-owned companies such as PT Telekomunikasi Indonesia (Telkom), the provider of domestic telecommunication services, PT PLN, the state electricity company, and PT Jasa Marga, state-owned toll road corporation, are now preparing to follow Indosat, the minister said.(hen)