Govt speeds up repayment of high-interest debts
Govt speeds up repayment of high-interest debts
JAKARTA (JP): The government will use the US$799 million in funds raised from the recent sales of its shares in Indosat through the New York Stock Exchange (NYSE) to speed up the repayment of its high-interest loans from the World Bank and the Asian Development Bank, a minister says.
"The early repayment is intended to reduce the burden of the state budget since most of the loans from the World Bank (WB) and the Asian Development Bank (ADB) carry fixed interest rates of above 11 percent per annum," Minister of Finance Mar'ie Muhammad told the Budgetary Commission of the House of Representatives here yesterday, the last day of their four-day hearing.
The minister explained that early repayment is focused on some of the high-interest loans extended by the WB and ADB in the period between 1981 and 1983.
The minister said that $426.05 million of the total funds from the sales of Indosat shares are for early repayment of high- interest loans from the WB and the remaining $365 million for some of the Manila-based ADB's loans.
Indosat, the provider of international telecommunication services, raised US$799 million from the sales of 25 percent of its ordinary shares through the NYSE in October and around Rp 650 billion ($297 million) from the sales of another 10 percent of its shares on the local capital market.
The shares sold through the NYSE were mainly government shares while those sold at home mostly consisted of new shares.
Mar'ie said that proceeds from the sale of the new shares will be used to strengthen Indosat's telecommunication facilities.
The government's outstanding debts fell by almost $3 billion to $56.6 billion as of the end of September from $59.46 billion at the end of June.
The government's outstanding borrowing as of the end of September constituted $26.02 billion from Japan, $10.14 billion from the WB, $4.36 billion from ADB, $3.11 billion from the United States, $2.22 billion from France, $1.43 billion from the Netherlands and $9.35 billion from other creditors. (hen)