Govt starts debt payment deferrals: Minister
Govt starts debt payment deferrals: Minister
JAKARTA (JP): Indonesia began deferring payments of its
sovereign debt this month in line with agreements made with the
country's major international lenders, a senior minister said
yesterday.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita added that Indonesia may defer more
sovereign debt payments for the 1999/2000 fiscal year if the
economic situation demanded it.
He said reports that the country had missed sovereign debt
payments for August were inaccurate, noting that the country had
simply begun to implement an agreement reached with the
International Monetary Fund (IMF) and the Paris Club of creditor
nations.
"This is not a default," Ginandjar told journalists before a
Cabinet meeting at the Bina Graha presidential office. "What we
did has already been told to the donor countries."
He stressed that the government would only defer payment of
its debt principal but would continue to pay the interest.
The head of the Ministry of Finance's legal and public
relations bureau, Hadiyanto, noted in a statement that the
sovereign debt rescheduling would apply to bilateral debts.
The rescheduling of the government's bilateral debts began
Aug. 6, Hadiyanto said.
"Debts other than bilateral ones, like bonds and commercial
loans, will still be serviced," he said.
Ginandjar said the sovereign debt rescheduled this fiscal year
would total US$1.25 billion, as agreed with the IMF and the Paris
Club.
"We will discuss the issue again for the next fiscal year," he
said. "If we still need to, we'll repropose it next year."
The $1.25 billion is part of an additional $6.2 billion in new
financial aid to Indonesia arranged by the IMF. The funds were
committed by, among others, international lenders which agreed to
reschedule debt payments.
The government previously said that countries which had agreed
to reschedule debt payments included the U.K., the U.S., France
and Germany.
Japan and other bilateral lenders and international financial
institutions chose to give Indonesia fresh loans to repay its
debts to them.
Ginandjar said Japan had committed $1 billion to Indonesia for
debt servicing.
Details on the sovereign debt rescheduling are to be fleshed
out at a meeting of Paris Club members in the French capital on
Sept. 22 and Sept. 23, at which Indonesia will be represented by
Minister of Finance Bambang Subianto.
Ginandjar said the current debt rescheduling, however, would
not be extended for 30 years -- as was the case in the early
1970s when the country was recovering from the economic turmoil
of the previous decade.
"Maybe it will not be for that long, only for the current
period of hardship or during the time when we want to safeguard
our balance of payments.
"If our economy is recovering and our exports are back to
normal, we can fulfill the repayments. We're going to discuss
those problems with the Paris Club."
Ginandjar said the timing would be governed by several
factors, including the successful implementation of the Frankfurt
agreement between Indonesian private debtors and international
banks to reschedule the country's massive private sector debt.
"We will also look at the Russian method," Ginandjar said.
(prb/rid)