Govt debt prepayment to continue

Govt debt prepayment to continue

JAKARTA (JP): The government plans to continue the prepayment
of its high-interest borrowing next fiscal year to further bring
down its already declining external debts, Minister of Finance
Mar'ie Muhammad said yesterday.

"Should the government's financial condition allow,
the government will continue the prepayment of its foreign debts,
especially those which carry high interest rates," Mar'ie said at
a hearing here with the House of Representatives' Budgetary
Commission.

Mar'ie explained that the planned debt prepayment will be
financed with proceeds to be raised from the sales of government
shares in state-owned companies or with the projected surplus
from this fiscal year's budget.

The minister said recently that the government is now
preparing three more state-owned companies -- PT Krakatau Steel,
toll-road operator PT Jasa Marga and Bank Negara Indonesia 1946
-- to go public later this year.

The first two will be listed both on domestic and
international stock exchanges, like their predecessors PT
Indosat, PT Telkom and PT Tambang Timah, while Bank Negara
Indonesia will be listed locally only.

In the 1994/1995 fiscal year, the government settled the
prepayment of $782.9 million in high-interest debts, consisting
of $423.2 million borrowed from the World Bank and another $359.7
million from the Asian Development Bank.

The funds used for debt prepayments in the 1994/1995 period
was generated from the sales of government shares in Indosat on
the New York Stock Exchange in 1994.

Mar'ie revealed yesterday that in the current fiscal year, the
government has prepaid high-interest debts worth $738.6 million,
comprising $264.7 million to the World Bank and $473.9 million to
the Asian Development Bank.

He said the debt prepayment in the current fiscal year was
made possible by the sales of the government's shares in Telkom
on the New York Stock Exchange and Tambang Timah on the London
Stock Exchange. Telkom contributed $605.9 million and Tambang
Timah $154.7 million.

Drop

The minister disclosed that the government's outstanding
foreign debts had dropped again to US$59.96 billion as of last
December from $61.3 billion as of September.

Out of the outstanding debts, $23.65 billion was obtained
under bilateral arrangements, carrying an average interest rate
of 2 percent per annum.

Other loans worth $19.24 billion were made under multilateral
deals, carrying an average interest rate of 7.07 percent per
annum. Some of these loans carry interest rates of over 10
percent.

Other loans of $14.85 billion were provided in the form of
export credits, $1.2 billion in leasing deals and $990.9 million
in commercial credits.

The minister and the commission were discussing amendments on
the government's budget plan for the current fiscal year at
yesterday's hearing, which will resume today and tomorrow.

Mar'ie said the current budget is estimated to enjoy a surplus
of Rp 375.3 billion (US$161 million), because revenues are
estimated to reach Rp 82.72 trillion, while spending is likely to
reach only Rp 82.35 trillion.

The current budget was originally envisaged to balance at Rp
78.02 trillion.

Mar'ie explained that funds collected from domestic sources
are estimated to contribute Rp 71.55 trillion to the government's
total revenues of Rp 82.72 trillion, which indicates an increase
of Rp 5.9 trillion from the original budget. Meanwhile, foreign
revenues are projected to decline by Rp 859 billion from the
original budget.

He explained that the increase in domestic revenues results
from unexpectedly higher tax and non-tax receipts as well as
higher receipts from the oil and gas sector.

Tax receipts are projected to reach Rp 48.42 trillion, 7
percent more than the original target; non-tax revenues are
estimated to reach Rp 7.8 trillion or 20.2 percent higher than
the target, while the oil and gas sector is estimated to
contribute Rp 14.8 trillion or 11.8 percent more than the
original estimate.

"With higher revenues from taxes, we expect that we can cool
down the economy from the current overheating because taxes have
a contractive effect on the economy," Mar'ie told the commission.
(rid)