Govt to borrow $5.25b in new debt next fiscal year

JAKARTA (JP): The government expects to borrow US$5.25 billion in new debt from overseas sources next fiscal year, up from $4.59 billion this fiscal year, Minister of Finance Mar'ie Muhammad said yesterday.

At a House Budget Commission hearing Mar'ie said the new debts would come from multilateral and bilateral plus export credits.

Multilateral financial institutions would provide most of the money next fiscal year which begins in April.

Indonesia expects to borrow another US$1.62 billion in new loans from the Asian Development Bank next fiscal year, up from $304.65 million this fiscal year. It hopes to get $1.51 billion from the World Bank, down from $1.63 billion.

Mar'ie said the World Bank and Asian Development Bank loans carried an average annual interest rate of 6.9 percent and 6.82 percent. They have a 15-year maturity and a 5-year grace period.

The government also expects to get $45.23 million in new loans from the Islamic Development Bank and $13.7 million from the International Fund for Agriculture Development, a UN affiliate.

Loans from the two institutions carry an average annual interest rate of 4 percent.

Japan's loans to Indonesia would drop from $1.49 billion to $457.92 million next fiscal year.

Germany is expected to be the biggest lender with a new loans worth $721 million, up from just $78 million this fiscal year.

The next largest lenders would be Britain ($238.79 million), Austria ($173.89 million), the Netherlands ($144.91 million) and France (105.23 million).

Other countries committed to lending Indonesia money next fiscal year include Canada ($52.87 million), Spain ($50 million), Australia ($45.89 million), South Korea ($18.76 million), Finland ($13.34 million), Belgium ($3.54 million) and China ($1.57 million).

Bilateral loans carry interest rates of between 6 percent and 9 percent a year. Their maturities range from 15 years to 25 years.

Interest rates for export credits range from 4 percent to 8 percent a year with maturities between 10 years and 18 years.

Mar'ie said the government's foreign debt had fallen from $57.22 billion last September to $54.6 billion in November.

The government announced earlier the country's total foreign debt was about US$110 billion, indicating $55 billion in private foreign debt.

Mar'ie said the fall in government foreign debt was because of the early repayment of high-interest debts and a sharp depreciation of the yen against the U.S. dollar.

By the end of this fiscal year the government would have repaid $3.35 billion in foreign debt ahead of schedule since the 1994/1995 fiscal year.

The funds to repay the government's debts have come from the partial sale of government firms and budget surpluses.

Mar'ie said the repayment policy was aimed mainly at reducing future debt servicing burdens and not to reduce the country's debt service ratio -- the ratio of foreign debt servicing to export revenue.

The government has announced that Indonesia's debt service ratio will reach 31.7 percent this fiscal year. Government debt will contribute 14.1 percent of this, private debt 15.5 percent and state enterprises 2.1 percent.

In the next fiscal year, the country's debt service ratio is projected to reach 31.2 percent, with the government contributing 11.8 percent, the private sector 17.8 percent and state firms 1.6 percent.

Mar'ie said the most effective way to reduce the debt service ratio was to export more.

"In any case, the role of the government is to create a climate conducive to encourage more exports through various policies," Mar'ie said. (rid)

Indonesia's Foreign Debts as of Nov. 30,1996 (in US$ million):

1. Japan 22,464.38, 2. Germany 3,600.96, 3. The United States 2,877.47, 4. France 2.658.59, 5. Britain 1,373.96, 6. The Netherlands 1.306.21, 7. Austria 1.023.58, 8. Australia 778.52, 9. Swizerland 517.38, 10. Canada 491.57, 11. Belgium 365.16, 12. Spain 289.60, 13. Finland 192.09, 14. Italy 191.43, 15. Denmark 125.10, 16. Brunei 93.06, 17. Rusia 86.46, 18. Sweden 81.24, 19. Arab Saudi 49.63, 20. Kuwait 47.62, 21. China 40.02, 22. South Korea 30.01, 23. Yugoslavia 19.19, 24. Taiwan 18.88, 25. Cekoslovakia 15.20, 26. Hungry 3.79, 27. New Zealand 0.42, 28. Bulgaria 0.34, 29. India 0.13, 30. International Institutions 15,873.90, Total 54,616.02

Source: The Ministry of Finance