Over $25b in foreign debt matures in 2001

Over $25b in foreign debt matures in 2001

JAKARTA (JP): Bank Indonesia (BI) deputy governor Burhanudin
Abdullah said that the country's overseas debt maturing this year
reached some US$25.39 billion.

Burhanudin told a weekend gathering with reporters at Anyer,
West Java, that the total consisted of $4.3 billion in sovereign
debt and $21.01 billion in private sector debt.

He was quoted by Satunet online as saying that the private
sector debt comprised of $11.54 billion owed by domestic
companies, $1.9 billion by the banking sector and $7.5 billion by
foreign companies operating in the country.

Burhanudin said that the country's outstanding overseas debt,
as of January, totaled $140.2 billion consisting of $74.2 billion
in sovereign debt and $66 billion in private sector debt.

The relatively huge amount of foreign debt, particularly
corporate debt maturing this year, would add additional pressure
on the ailing rupiah unless the debts are restructured.

The rupiah recently dropped to a 31-month low of more than Rp
12,000 per U.S. dollar due to a combination of domestic political
uncertainty and economic woes. The rupiah managed to strengthen
to around Rp 11,300 per dollar last week.

But with slow progress in the restructuring of the corporate
foreign debt, the rupiah would continue to be under pressure,
analysts said.

But experts have warned that the country's public sector debts
were also a critical problem that could cause major new economic
woes unless measures are taken to reduce them to a manageable
level.

Besides being burdened with $74.2 billion in foreign debt, the
government is also reeling under Rp 600 trillion ($60 billion) in
domestic debt, thereby making the total amount of public sector
debt greater than the country's gross domestic product (Rp
1,290.6 trillion at current market prices).

The huge domestic debt is the resulting cost of financing the
country's largest ever bank restructuring and recapitalization
program.

The government is planning to reduce its domestic debt by
pushing the Indonesian Bank Restructuring Agency (IBRA), a unit
under the finance ministry, to speed up the sales of assets.

Analysts, however, said that IBRA's performance had so far
been disappointing partly due to strong resistance from certain
powerful businessmen who did not want to see their previously-
owned assets fall into the hands of new foreign owners.

IBRA has taken over more than Rp 600 trillion worth of assets
from ailing banks and former bank owners who owed huge debts to
the government.

The government must also continue to seek restructuring
facilities from its international creditors, particularly
sovereign creditors grouped in the Paris Club to avoid
defaulting.

The government is scheduled to meet the Paris Club later this
month to discuss the restructuring of Indonesia's sovereign debt.

But the support of the Paris Club would only be obtained if
the government managed to gain the International Monetary Fund's
(IMF) seal of approval for its new reform package.

In fact, the restructuring facility promised by the Paris Club
last year for some $2.8 billion in sovereign debt could be
canceled if the government failed to sign a new agreement with
the IMF soon.

The IMF, which canceled its loan disbursement to the country
late last year, has said that it would only agree to resume
discussions on the economic program with the government after the
House of Representatives approved the revision of the 2001 state
budget.

The government is currently finalizing the budget revision,
and plans to submit it to the House sometime this week.

The state budget has to be revised as various assumptions it
adopted in January are no longer valid due to the sharp drop in
the value of the rupiah and the rising domestic interest rate.
(rei)