Govt pays US$540m off foreign loans

JAKARTA (JP): The government last month paid US$540.46 million of its high-interest debt to multilateral agencies ahead of schedule and will soon amortize another $50.58 million, Minister of Finance Mar'ie Muhammad said yesterday.

Speaking before the House of Representatives' plenary session, Mar'ie said the amortized loans had annual interest rates of more than 9 percent.

Mar'ie said $262.97 million of the early loan repayments went to the World Bank and $277.58 million to the Asian Development Bank.

The government is also paying off $50.58 million of its high- interest loans from the French and the United States governments and $156 million in export credits, he said.

"If these debt prepayments can be concluded, the government will have prepaid a total $2.82 billion in foreign debt by the end of the current fiscal year (1996/1997) next March," Mar'ie said.

The amortization of debt will allow the government to save $440 million in annual interest charges, he said.

Mar'ie explained yesterday how the debt would be amortized when he presented five bills to the House for deliberation.

The bills are on local taxes and fees; on tax on the transfer of land and buildings; on tax collection with distress warrants; on tax courts; and on amendments to the 1994/1995 budget.

The minister did not elaborate on where the debt repayment funds came from.

He said earlier this year that the government would continue to repay its high-interest loans early using proceeds from the sale of government shares in state-owned companies and from budget surpluses.

Mar'ie yesterday dismissed speculation that the early repayments were financed by proceeds from the sale of Bank BNI shares, which were listed on the Jakarta stock exchange yesterday.

"No, the funds were not derived from BNI because BNI will use the fresh funds from its public offering to strengthen its capital structure," Mar'ie told journalists after the plenary session.

In the 1995/1996 fiscal year, the government paid $738.6 million of its high-interest debt early: $264.7 million went to the World Bank and $473.9 million to the Asian Development Bank.

The government made these repayments after selling its shares in domestic telecommunications provider PT Telkom on the New York Stock Exchange and tin miner PT Tambang Timah on the London Stock Exchange.

In the 1994/1995 fiscal year, the government amortized $782.9 million of its high-interest debt: $423.2 million to the World Bank and $359.7 million to the Asian Development Bank.

Early debt repayments in the 1994/1995 fiscal year were derived from the sale of government shares in international telecommunications firm PT Indosat on the domestic bourses and New York Stock Exchange in 1994. (rid)