Paris Club reschedules Indonesia's debts

Paris Club reschedules Indonesia's debts

PARIS (Agencies): The Paris Club of 19 government creditors
agreed on Thursday to reschedule US$5.8 billion in Indonesia's
debts due to mature between April, 2000 and March 2002.

Indonesian chief economics minister Kwik Kian Gie told
reporters after a day-and-a-half-long meeting here that
the debt principals were rescheduled for 20 years.

"This result is quite encouraging and reflects international
confidence in Indonesia's ability to recover its economy," Kwik
told reporters after the signing of the rescheduling package
agreement.

Kwik said $2.21 billion of the rescheduled debts originally
would mature this year, $2.98 billion in 2001 and $717 million in
the first quarter of 2002.

"The rescheduling package will greatly help us manage our debt
servicing burdens and our state budget," he added.

President Abdurrahman Wahid, who was immediately briefed in
Havana on the agreement, expressed a great relief, saying "our
work is now fully accomplished."

Abdurrahman, who is in Cuba to attend the summit of the Group
of 77 developing nations, expressed gratitude to the
International Monetary Fund and other institutions who backed
Indonesia at the Paris meeting.

The President also thanked French President Jacques Chirac and
Dutch Prime Minister Wim Kok for their full support to make the
debt-rescheduling negotiations successful.

Earlier last September, Indonesia and the Paris Club also
reached an agreement to reschedule $4.2 billion in debts that
were due to mature by March, 2000.

"This is a clear signal of confidence we have in the
Indonesian economy," said Philippe de Fontaine Vive, vice
resident of the Paris Club.

The accord hinges on recognition by the International Monetary
Fund that Indonesia has implemented a series of reforms it
recommended. A decision is expected by the IMF's board in early
June. The IMF withheld $400 million in aid last month because it
was not satisfied the nation had met conditions for releasing the
funds.

The debt rescheduling is expected to boost flagging foreign
investment and to also help Indonesian companies restructure $81
billion in debt. It should also help the government reach its
target of 4 percent economic growth this year, after zero growth
last year and a 13.2 percent contraction in 1998.

The IMF will decide this week when to send a review team to
Indonesia, a prerequisite for releasing the money.

The stalled $400 million IMF payment is part of a $5 billion,
three-year loan the fund approved in February under an
international bailout plan worth more than $50 billion.

The Indonesian Bank Restructuring Agency has met most of its
IMF obligations, including filing bankruptcy cases against four
companies and transferring bad debt from Bank Mandiri. IBRA said
it plans to sell about a third of PT Bank Central Asia in an
initial share sale.

Indonesia Finance Minister Bambang Sudibyo said the government
"got what we asked for."

The Paris Club's De Fountaine Vive said the rescheduling
package is based on the Indonesian government's 1998 memorandum
of understanding with the Paris Club on the rescheduling of its
sovereign debt.

The club's members are sure the new and improved agreement
"should contribute to better capital inflows into Indonesia,
especially from the private sector," he said.

"The current agreement is a clear signal for the markets of
the Paris Club's confidence that the recovery of the Indonesian
economy is there, and will be sustained," he added.

Indonesian representatives were nevertheless candid about the
task of pushing through future economic reforms through the
Indonesian legislature.

"We will have to fight hard for approval in Parliament,
because this is a real Parliament," said Bambang. (byg)