Govt to curb new foreign loans

Govt to curb new foreign loans

JAKARTA (JP): The government will continue to curb new foreign borrowings to prevent the total foreign debts outstanding, as a percentage of the country's gross domestic product, from increasing beyond 52 percent at present, a minister says.

"We instead plan to gradually reduce the ratio of our total foreign debts against our GDP to 46 percent by 1999," said Minister of National Development Planning, Ginandjar Kartasasmita, in a hearing with the Budgetary Commission of the House of Representatives yesterday.

Ginandjar said that even though the country's foreign debts would continue to increase in absolute terms, their ratio against the GDP would not rise from its current level.

"During the current Sixth Five Year Plan (1994-1999) the government will also see to it that the debt service ratio against export earnings decreases to 28.2 percent," he added.

Of the 28.2 percent, he said, 20.6 percentage points will consist of government debt service and the other 7.6 percentage points of private debt service.

Indonesia's debt service ratio at present stands at approximately 30 percent.

Ginandjar did not mention the total amount of foreign debts outstanding at present but official figures recently put it at US$93 billion as of last September.

The government has acknowledged that the total foreign debts might reach the $100 billion mark this year.

Senior economist Sumitro Djojohadikusumo even estimated last December that the country's total foreign debts would increase to $110 billion in 1998.

According to Minister of Finance Mar'ie Muhammad, $56.66 billion of the foreign debts were owed by the government and the remaining $36 billion by the private sector.

Ginandjar was optimistic that concerted efforts to promote exports would result in a reduction of the debt service ratio.

"We expect to expand our exports by 16.8 percent a year during the next five years," he added.

Ginandjar said the government would also do its best to check the current account deficit at two percent of the GDP. (fhp)