Minister warns of excessive foreign borrowing
JAKARTA (JP): Coordinating Minister for Economy and Finance Saleh Afiff warned yesterday that Indonesia's offshore debts now stand at US$90 billion.
"Of the total borrowing, around $36 billion is owed by the private sector and $54 billion by the government," Afiff said in a two-day seminar on Indonesian mining.
He said about 20 percent of the debt is short-term.
Saleh's figure is far higher than Minister of Finance Mar'ie Muhammad's December figures, which placed the offshore debt at $80 billion.
"I, therefore, urge all borrowers in the country to restrain themselves from new borrowing to help the nation's total debts stay below the psychological barrier of $100 billion," Saleh said. "If our debts exceed that barrier, their service payments will affect our current accounts and our donors may doubt our credibility."
Saleh said, however, that Indonesia's economy will cope successfully with the current level of foreign debt. The account deficit for fiscal 1993-94 is estimated at $3 billion, about two percent of gross domestic product (GDP).
The 1993-94 account deficit was far better than the $3.7 billion in shortfall in 1992-93.
Indonesia's GDP is estimated at $150 billion for the current fiscal year.
Saleh said the government is strongly committed to tightening its control of offshore borrowing in the coming years.
The government has set the ceiling on offshore commercial loans at $6.5 billion until next fiscal year. The annual ceilings on foreign loans to the central bank, state banks and private banks are set at $500 million, $1 billion and $500 million, respectively.
With the existing ceilings, private companies are permitted to borrow up to $2.8 billion from foreign creditors in this fiscal year and up to $2.9 billion in the next fiscal year, while state companies may borrow up to $1.4 billion in the current fiscal year and up to $1.6 billion in the next fiscal year.
Credibility
During yesterday's seminar, which was attended by around 300 foreign experts and officials of the Ministry of Mines and Energy, Saleh said creditors' confidence in Indonesia's economy is actually improving.
"I, therefore, am optimistic that creditors within the Consultative Group for Indonesia (CGI) will be willing this fiscal year to provide new aid at the same level of last fiscal year's.
The group, chaired by the World Bank, pledged $5.11 billion in aid to Indonesia last fiscal year.
Saleh said Indonesia's foreign exchange reserves of $12 billion are also at a convenient level because they are sufficient for the financing of imports within five months.(fhp)