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