Paris Club gives RI $5.4b in debt relief
Paris Club gives RI $5.4b in debt relief
Reuters, Paris
The Paris Club of creditor countries rewarded Indonesia's
economic and legal reforms on Friday with a debt rescheduling
deal vital to the nation's fiscal and overall stability.
An official statement from the grouping said the deal covered
both principal and interest on US$5.4 billion of a total $7.5
billion in foreign debt falling due from April 1, 2002 to
December 31, 2003.
Foreign development aid loans would be repaid over 20 years,
including 10 years' grace. Other official foreign debt covered by
the deal would be repaid over 18 years, with five years' grace.
The statement, issued after two days of talks in Paris, said
Indonesia's debt service payments to Paris Club creditors over
the period of the deal would not exceed $2.7 billion.
It said said Indonesia had agreed to seek comparable treatment
from private creditors but made clear the club would not insist
on absolute equality for all lenders.
"After careful examination...the group of official creditor
countries of Indonesia agreed that a restructuring of maturities
falling due under the interbank exchange offers and the so-called
Yankee bond was not practical," it said.
Analysts had said strict insistence by the Paris Club on
burden sharing by private lenders could have led to a technical
sovereign ratings downgrade to Indonesia to "selective default".
Its other foreign debt includes a $400 million Yankee bond due
in 2006. A Yankee bond is a U.S. dollar-denominated bond sold by
a foreign company or country.
Friday's deal was the first to cover interest as well as
principal on some of its $140 billion debts.
"We think the terms we have got are much better than what we
got in previous Paris Club rounds," Indonesia's Chief Economic
Minister Dorodjatun Kuntjoro-Jakti told reporters in Paris.
"We hope this will alleviate the pressure on the budget and
balance of payments for this year and next but there are still
uncertainties, notably the price of oil and the yen-to-dollar
exchange rate," he said.
Jakarta needs the rescheduling to help cut its 2002 budget
deficit and reduce balance of payment risks.