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)