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)