Government speeds up foreign debt repayment

Government speeds up foreign debt repayment

JAKARTA (JP): The government will accelerate its repayment of high-interest foreign debts with the proceeds from the recent international public offerings of state-owned companies PT Tambang Timah and PT Telkom, Minister of Finance Mar'ie Muhammad said yesterday.

Mar'ie said the debts to be repaid are those owed to the World Bank and the Asian Development Bank (ADB) which carry interest rates exceeding 10 percent per annum.

"If we don't speed up our debt repayment, the cumulative debt with interest rates over 10 percent may reach US$2.1 billion," he told reporters after attending a plenary session of the House of Representatives.

During yesterday's session the House approved the implementation of the state budget for the 1993/1994 fiscal year.

Mar'ie said that Tambang Timah's overseas offering in October resulted in $154.72 million in revenues for the government, while its domestic sales brought in Rp 140.5 billion ($61.35 million) in company revenues.

Meanwhile, Telkom's offering abroad resulted in $605.95 million in net earnings for the government. From domestic sales, the government obtained Rp 437.32 billion while Telkom earned Rp 1.85 trillion.

Mar'ie said the government's total net revenues from the listing of the two firms of $760.67 million would be used to repay its debts to the ADB and the World Bank.

The debts to be repaid were incurred in 1982.

Presently, Indonesia's debts to the ADB which have interest rates of more than 10 percent per annum total $1.11 billion, while those to the World Bank total $264 million.

Saving

"By accelerating debt repayment, we can save more than $700 million," Mar'ie said.

He said that, apart from cutting back spending, the accelerated repayment would boost Indonesia's credibility with the international community.

"This is important for the national economy. Better credibility affects both the government and the private sector... Hopefully this will also improve Indonesia's debt rating," he added.

Standard & Poor's, one of the world's most influential rating agencies, recently raised its long-term foreign currency rating of Indonesia to triple B (BBB) from triple B minus (BBB-).

Legislator Hamzah Haz, a member of the House's Budgetary Commission, praised the government move, saying that any surpluses gained by the government could be used to pay back foreign debts.

Hamzah said he was not concerned that the debts were paid using the proceeds of the partial privatization of state firms rather than with export revenues.

"What's important is the fact that we are capable of penetrating the international market," he said. (pwn)