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.