Govt proposes to reschedule sovereign debt
Govt proposes to reschedule sovereign debt
JAKARTA (JP): The government plans to reschedule part of its
foreign debt to help raise funds to cover its immediate economic
and fiscal needs, according to Coordinating Minister for Economy,
Finance and Industry Ginandjar Kartasasmita.
Speaking to journalists after a two-hour meeting yesterday
with President B.J. Habibie, Ginandjar said the government would
only reschedule the principal and would continue to pay the
interest.
Ginandjar said the government had to adopt such a
restructuring plan because the country was facing such severe
economic turmoil.
"It is not proper that during these hard economic conditions
we force ourselves to repay, to settle our debt," Ginandjar said.
With the rescheduling of debt repayments, funds that would
have been used to repay loans could be redirected to other
purposes, he said.
Ginandjar called on the public not to worry about the
government's foreign debt restructuring plan as countries in
Latin America had pursued similar strategies to survive crises in
the 1980s and early 1990s.
He also assured foreign creditors that Indonesia would remain
committed to its debt obligations despite the partial
rescheduling plan.
"Technically we will not be making a default. Therefore we do
not need to use the Paris Club procedure because we are not
rescheduling the interest but just the principal."
Nevertheless, he said, the proposal would be discussed with
donors and the government hoped to reach a final agreement with
them at the Consultative Group on Indonesia (CGI) meeting in
Paris on July 29 and July 30.
Ginandjar noted the government would not negotiate with
multilateral organizations such as the World Bank and the Asian
Development Bank because they have strict rules which do not
allow them to renegotiate any kind of rescheduling.
Therefore, the government will only ask donor countries to
help with their bilateral loans to Indonesia.
However, Ginandjar indicated that Indonesia's largest creditor
country, Japan, was reluctant to agree to the proposal.
Fresh money
"Japan has its own approach. Japan prefers to give fresh money
and we repay our debt principal and the interest," Ginandjar
said.
Asked about the rescheduling timetable, Ginandjar said it had
yet to be decided, adding that the country had already paid its
debt obligations for April/June 1998.
"Now we are calculating how much we owe for July 1998/March
1999," Ginandjar said, but he declined to give further details of
the amount to be rescheduled or the identities of the creditor
countries.
"Within one or two days I will announce the details of the
(proposal) components," the minister promised.
"We will continue this postponement until we are able to
overcome the crisis," he added.
The government's official debt totals US$54.4 billion, while
corporate debt is about $80 billion. The private sector reached a
temporary moratorium with its creditors recently.
In the 1998/1999 revised budget, the government allocated Rp
46.51 trillion ($4.39 billion on an assumption of Rp 10,600 per
dollar) for repayment of overseas debt principal during the
fiscal year and Rp 31.03 trillion for interest. (prb)