Govt to issue Rp 5t bonds

Govt to issue Rp 5t bonds

JAKARTA: The Indonesian government plans to issue Rp 5 trillion (US$562 million) of bonds within two months to support the state budget, Minister of Finance Boediono said Monday.

Boediono didn't provide further details.

The Rp 5 trillion issue is part of the government's efforts to raise Rp 7.7 trillion this year from the local debt market to help refinance some of the maturing bonds issued after the 1997- 98 Asian Financial crisis to bail out the banking system.

In April the government issued Rp 2.7 trillion of eight-year bonds with a weighted average yield of 12.21 percent.

The issue received strong interest from local and foreign investors.

The bond issuance is also expected to help develop the country's illiquid secondary bond market. A more developed bond market will allow the government to share, with private investors, the costs of bailing out local banks.

The government also plans to issue bonds overseas next year as an alternative to funding the financing gap, which may emerge after the country ends its current $5 billion bailout assistance program from the International Monetary Fund in December. -- Dow Jones

Thailand's Q1 growth seen at 5.8%

BANGKOK: Thailand's economy is expected to have surged 5.8 percent in the first three months of 2003 from a year earlier, driven by strong consumption and government spending, the central bank said Tuesday.

"Although tourism income has weakened and is expected to fall further in April, GDP (gross domestic product) growth in the first quarter is expected at 5.8 percent," Bank of Thailand governor Pridiyathorn Devakula said.

Farm incomes grew 18.8 percent in the first quarter, providing another spur for growth, Pridiyathorn said.

"This is a positive signal," he said.

Farm income over the whole of 2003 is expected to rise by four to five percent overall after growing just two percent last year, Pridiyathorn added.

Last week, the central bank said that the economy in March had continued to expand "satisfactorily", although the month saw the start of the negative impact from the outbreak of the war in Iraq and Severe Acute Respiratory Syndrome (SARS).

Tourism, a top foreign exchange earner for the kingdom, has been badly hit by the SARS outbreak, with overseas arrivals at Bangkok International Airport falling 40.8 percent in the first three weeks of April. -- AFP

S'pore manufacturing index down

SINGAPORE: A leading indicator of Singapore's export-reliant manufacturing sector contracted for the second time in two months after 12 months of straight expansion as new orders fell, a monitor said Tuesday.

The Singapore Institute of Purchasing and Materials Management said the Purchasing Managers' Index for April was at 49.9, a marginal increase from the previous month's 49.7.

A reading below 50.0 means the economy is declining.

The index for the electronics sector, which accounts for nearly half of the output in manufacturing, reverted to an expansion mode, rising 1.9 points to 51.3 after shrinking in March.

But while production output expanded, "the overall new orders index contracted for the first time in 15 months" as demand slackened, the institute said.

Manufacturing is a pillar of the Singapore economy, accounting for almost a quarter of the city-state's gross domestic product (GDP).

The bulk of output from the sector is exported to the world's major economies, particularly to the United States. -- AFP

German banks cutting back on lending

FRANKFURT: The Bundesbank expressed concern on Tuesday that German banks were cutting back on lending in a generally difficult economic environment.

The German central bank's chief economist Hermann Remsperger said that the muted lending activity in the private sector "is primarily attributable to a decline in demand related to the economic downturn." But the sharp deterioration in creditworthiness of borrowers was also an important factor, Remsperger said in a speech prepared for delivery at a banking congress in Timmendorf, north Germany.

"There are already signs of a certain degree of reticence in the supply of credit," the Bundesbank economist said.

This was because banks were tailoring their credit conditions much more to risk assessment. Furthermore, the banks' own weak profitability was making them more cautious when it came to awarding loans, Remsperger suggested.

A copy of the speech was made available by the Bundesbank in Frankfurt. -- AFP

North Korea issues bonds

SEOUL: Cash-strapped North Korea began issuing bonds this month for the first time in five decades, official media in the country said Tuesday.

The state-run Korean Central News Agency (KCNA) said the sale of the bonds started on Thursday last week after its announcement in March of laws on the bond issuance -- a rare move in the communist state.

"All the people of the country... are taking an active part in buying bonds," KCNA said. But it did not disclose concrete figures on bond selling.

The North has not issued state bonds since the 1950-1953 Korean War because of its long-held policy of banning or rejecting capitalism.

Analysts say the bond issue is part of North Korea's experimental liberalization moves begun in July last year to revive its moribund economy.

The North has introduced limited economic reforms, increasing wages and prices. State rationing of necessities has been phased out, with people allowed to increase their wages if they lift profits. -- AFP