Thu, 20 Nov 2003

Govt to issue international bonds in first quarter 2004

The Jakarta Post, Jakarta

The government plans to issue international bonds worth US$400 million in the first quarter of 2004 to help finance the state budget deficit, Bank Indonesia said Wednesday.

The central bank said that during a recent road show in Singapore and Hong Kong, investors were enthusiastic towards the presentations made by Indonesian authorities.

Next year's state budget deficit is projected at Rp 24.4 trillion (US$2.89 billion), or 1.2 percent of the country's gross domestic product. Under the budget plan, the government plans to issue domestic and international bonds totaling Rp 32.5 trillion.

The international bond issue is particularly crucial as the country will no longer be eligible to a debt rescheduling facility from the Paris Club of creditor nations as the existing International Monetary Fund economic reform program will end later this year.

Bank Indonesia spokesman Rizal A. Djaafara said central bank governor Burhanuddin Abdullah had made a presentation about the improving monetary, fiscal and banking conditions in the country.

He said many investors were asking about the law enforcement issue in Indonesia.

In Singapore, 110 investors attended the meeting, while in Hong Kong it attracted 70 investors. Some of the high profile names include the Government of Singapore Investment Corporation, Prudential Asset Management, American International Assurance, Income Partners Asset, UBS Principle and ING Investment Management.

The Indonesian financial authorities also met with international rating agencies Standard & Poor's, and Fitch.

The government expects international rating agencies to lift the country's ratings to investment grade amid significant improvement in the country's macroeconomic conditions.

Standard and Poor's (S&P) put its long-term foreign and local currency ratings for Indonesia at B and B+, respectively, which are several notches below investment grade.

The government and Bank Indonesia officials will hold a similar investor forum in Tokyo on Nov. 20. Before the Singapore and Hong Kong visits, the authorities also took the road show to London, Dubai and New York.