Goldman Sachs sees no debt moratorium

Goldman Sachs sees no debt moratorium

SINGAPORE (Reuters): Indonesia is unlikely to impose a debt
moratorium or capital controls, Goldman Sachs economist Don Hanna
said on Thursday.

Hanna, who had just flown in from Indonesia, told a Singapore
investment conference the Jakarta government could come up with a
"subsidized exchange rate" for companies to help them cope with
their external debt repayments.

Indonesian corporate foreign debt is estimated at around $66
billion.

Some companies have started paying dollar-denominated debts in
rupiah and their creditors are immediately offloading the
currency, trapping it in a downward spiral.

The rupiah sank to 15,000 to the U.S. dollar in early
Singapore trade Thursday -- down a massive 84 percent since it
was at 2,400 last July before Asia's currency crisis swept the
region.

Hanna said the markets should soon have a better understanding
of how Indonesia planned to deal with its corporate external
debt.

Banking sources in Indonesia said the government and the
International Monetary Fund, which put together a $43 billion
rescue package for the country, were looking at ways to deal with
the private sector debt problem.

Hanna also said the situation in Indonesia would remain quite
volatile in the coming weeks, especially after next week's Eid
al-Fitr holidays, which mark the end of the holy Islamic fasting
month of Ramadan, in mainly Moslem Indonesia.

Companies were expected to close for the holidays and many may
not open afterwards and that could trigger worker unrest, he
said.

Because Indonesia's crisis is largely a domestic issue, the
implications of a spill-over into the region were likely to be
small, he said.

This was reflected in the relatively small falls in other
currencies like the Philippines peso and the Thai baht compared
with the 20 percent fluctuations seen in the rupiah, he said.