Government mulls more debt rescheduling

Government mulls more debt rescheduling

JAKARTA (JP): Chairman of the National Development Planning
Board (Bappenas) Boediono confirmed on Monday that the government
was leaning toward requesting further debt rescheduling through
the Paris Club of creditor countries to ease the burden of the
2000/2001 state budget beginning in April.

He said the government was in the process of calculating a
suitable amount for rescheduling according to the country's
balance of payments.

"We're still calculating it, but it may be in the range of
US$2.6 billion to $3 billion," he said following a meeting with
senior economic ministers.

Boediono ruled out asking for debt forgiveness from sovereign
creditors, which has been proposed by some analysts.

"We are not planning to ask for debt forgiveness because there
are other alternatives," he said.

"What is possible is that we'll seek debt rescheduling."

The state budget in the next fiscal year will continue to be
weighed down by the demands of various economic reform programs,
particularly the costly bank recapitalization program.

The country will have to seek more overseas funds, but the
World Bank recently warned that major lenders grouped in the
Consultative Group on Indonesia (CGI) might be unable to provide
the huge support of former years, including almost $8 billion in
1998.

The bank urged the country to secure more domestic financing
resources, including through privatization programs, taxation and
reducing subsidy spending.

The CGI creditors grouping, which is led by the World Bank, is
set to convene in Paris on July 27 to July 28.

Major donors recently indicated that they would provide the
country with $4.7 billion in new loans this year.

In addition to receiving about $7.9 billion last year, the
government also clinched agreements last year with the Paris Club
to reschedule some $4.2 billion in debt principal falling due
from August to March 2000 to between 11 years and 20 years.

The government is expected to discuss its debt rescheduling
plan at the CGI meeting, with the final decision to be made at
the Paris Club meeting in September.

Separately, Bank Indonesia Governor Sjahril Sabirin said that
the amount of sovereign debt to be rescheduled could not yet be
decided because the government was still assessing the condition
of balance of payments.

Hardest hit of all Asian countries in the economic crisis,
Indonesia suffered with an economic contraction of 13.68 percent
last year. Millions of people have been laid-off and thrown into
absolute poverty after years of remarkable growth.(rei)