Government's foreign debts falls to $54.6b

Government's foreign debts falls to $54.6b

JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced
yesterday the government's foreign debt had fallen to $54.6
billion last November from $57.22 billion in September and $59.59
billion at the end of 1995.

Mar'ie told a House of Representatives' plenary session that
the remaining $54.6 billion debt had a cumulative interest value
of $21.4 billion.

The minister did not disclose the value of private foreign
debt.

Bank Indonesia Governor J. Soedradjad Djiwandono revealed
earlier this month that the country's total foreign debt had
reached about US$110 billion, indicating that private foreign
debt was about $55 billion.

Mar'ie said yesterday the reduction in the government's
foreign debt was caused mainly by early repayments of high-
interest debts and a sharp depreciation of the Japanese yen
against the U.S. dollar.

"The government appreciates the House's support for the
government's policy of repaying some of our external debts,
especially those with high interest," Mar'ie told the session
deliberating the 1997/1998 budget.

When explaining the budget to journalists earlier this month,
Marie said the government had repaid $2.6 billion in foreign debt
ahead of schedule since the 1994/1995 fiscal year, saving the
government Rp 1.45 billion in interest payments.

Mar'ie said yesterday the government had repaid its high-
interest loans with budget surpluses and proceeds from the sale
of government shares in state enterprises.

He said the government repaid in the 1994/1995 fiscal year
debt bearing interest of 11 percent or more with proceeds from
the sale of shares in international telecommunications firm PT
Indosat.

In 1995/1996, the government repaid debts with interest of 10
percent or more with proceeds from the privatization of domestic
telecommunications firm PT Telkom and tin miner PT Tambang Timah.

Last October, the government repaid debt bearing interest of 9
percent or more with funds from budget surpluses.

And last December, the government proposed to settle its debts
with interest of 8 percent or more to the World Bank and Asian
Development Bank, using proceeds from another sale of Telkom
shares on overseas markets.

Mar'ie said the government would continue to repay its high-
interest loans in coming years.

"Like in the past, the funds to repay our debts will come from
the sale of government shares in state firms and budget
surpluses," Mar'ie said.

The minister said last November that depreciation of the
Japanese yen against the U.S. greenback had reduced the
government's foreign debt exposure.

The country's yen-denominated offshore debt, which accounts
for about 40 percent of its total foreign debt, fell to US$22.4
billion in September from $24.03 billion in December 1995.

The dollar was worth about 100 yen in December 1995 after
dipping to its lowest level, about 80 yen, several months before.
The dollar has continued to recover, and was worth 119.50 yen
yesterday.

Although the government's external debt was decreasing, Mar'ie
said, the country's debt service ratio -- the ratio of foreign
debt servicing to export revenue -- would not reach the 25
percent target by 1999 because of increasing private debt.

Mar'ie said Indonesia's debt service ratio would reach 31.7
percent by the end of the 1996/1997 fiscal year, of which
government debt would contribute 14.1 percent, private debt 15.5
percent and state enterprise debt 2.1 percent.

In the next fiscal year, beginning in April, the country's
debt service ratio is projected to reach 31.2 percent, with the
government contributing 11.8 percent, private sector contributing
17.8 percent and state firms contributing 1.6 percent.

"Our national debt service ratio, although decreasing, is yet
to reach the target (of 25 percent) set in the Five-Year
Development Plan (ending in March 1997)," Mar'ie said. (rid)