Paris Club expects RI to suspend its debt repayments
Paris Club expects RI to suspend its debt repayments
PARIS (Agencies): A Paris Club official said yesterday that Indonesia was expected to suspend some debt repayments in August ahead of a September agreement on the treatment of its debt.
Asked to comment on newswire reports that Indonesia had defaulted on a sovereign debt repayment, the official said: "It was expected within the framework of the treatment of their sovereign debt...that the August repayment would be suspended."
"In September we're going to have an agreement on their debt treatment," the official, who asked not to be identified, said.
The official did not say how much the suspended repayment was worth and said it would have been due around the beginning of the month, but said that the suspension was in line with agreements reached.
In Jakarta, Coordinating Minister of Economy, Finance and Industry Ginandjar Kartasasmita said yesterday Indonesia began to reschedule its sovereign debt this week in line with agreements with its major international lenders,
Speaking to Dow Jones Newswires, Ginandjar said reports that the country had missed sovereign debt payments were inaccurate, stressing that the country had simply begun to implement an agreement reached with the International Monetary Fund.
"We have already notified the Paris Club (of creditor nations) about this...we are actually not reneging, just implementing the agreement," Ginandjar said.
"It's part of the package we have worked out with the IMF of US$6.2 billion already incorporated in our budget," he said. "It's clear, it's transparent. It's nothing new, it shouldn't shock the markets."
Ginandjar confirmed that Indonesia would continue to pay interest on its debt, as agreed with its lenders.
"We were advised by the IMF that we could already notify (our lenders) and start to reschedule sovereign debt immediately," Ginandjar said, adding that the government was also advised on the matter by the Group of Seven leading industrialized nations.
A German banker involved in lending to the country said yesterday that Indonesia had not indicated to German commercial bankers that it was not able to make payments on outstanding sovereign debt.
"We haven't experienced any defaults (on interest payments) on the sovereign debt we are exposed to, nor have we heard" of any defaults at other German banks, the banker said.
His bank, for one, punctually received payment of interest due on Indonesian government debt in July and still expects to receive the next payment scheduled in December, he explained.
The official did not say how much the suspended repayment was worth and said it would have been due around the beginning of the month, but said that the suspension was in line with agreements reached.
On July 30, international donor nations pledged $7.9 billion in aid this year to help Indonesia's devastated economy recover.
Meanwhile, a senior official at rating agency Standard & Poor's said that Indonesia's debt rescheduling talks relate to inter-governmental debt and do not at present include rated bonds issued by the country.
But the talks to reschedule Indonesia's sovereign debt via the Paris Club of official creditors could end up being complex and may result in some form of debt relief, David Beers, managing director for sovereign ratings at S&P said.