Private sector debt up

JAKARTA (JP): The outstanding foreign debt of the private sector surged by US$6.8 billion within three months, while the government's outstanding borrowing fell by almost $3 billion.

"As of the end of September, the country's total foreign debt stood at $93 billion, of which $56.66 billion was owed by the government and the remaining $36.34 billion by the private sector," Minister of Finance Mar'ie Muhammad said in a hearing with the Budgetary Commission of the House of Representatives (DPR) here yesterday.

In a hearing with the commission in September, Mar'ie said that as of the end of June, the country's total foreign debt stood at $89 billion, comprising of $59.46 billion owed by the government and $29.54 billion by the private sector.

The minister said yesterday that the government's outstanding borrowing as of September constituted $26.02 billion from Japan, $10.14 billion from the World Bank, $4.36 billion from the Asian Development Bank, $3.11 billion from the United States, $2.22 billion from France, $1.43 billion from the Netherlands and $9.35 billion from other creditors.

Showing concern over the possibility of increased demand for offshore loans by the private sector, Mar'ie said enterprises should make efforts to improve the management of their borrowing in order not to burden their own business.

"I would suggest that any foreign loans be used to finance productive projects," he said.

He added that private investment is still needed to help develop the various business sectors in the country.

He also assured the commission that the government is committed to tapping foreign loans for productive activities, which have a high priority of development, including those for transmigration, transportation, irrigation, mining and energy.

"According to our agreement with foreign creditors, we will use only some Rp 5 trillion ($2.28 billion) for the country's development projects in the second semester of the current fiscal year," he said, adding that the government had used Rp 5.11 trillion in the first semester (April-September).

In early July, the World Bank-chaired Consultative Group on Indonesia (CGI) pledged to provide a total of $5.2 billion to assist Indonesia's development projects in the current fiscal year.

Repayment

Mar'ie said that in the first semester, the government repaid Rp 8.16 trillion or 45.4 percent of its total target of Rp 17.96 trillion in debt services for the whole fiscal year.

He also said that the amount of undisbursed loans committed by creditors stood at $20.11 billion as of September.

"The speed of loan disbursements depends on the government's readiness to implement projects in the country," he said.

He cautioned that the administrative matters related to projects, including tender negotiations, bidding and pre- qualification procedures, which usually take a long time, have also caused delays in the disbursement.

In addition, a lack of coordination among various government institutions, as well as problems caused by land disputes, have sometimes hampered the realization of disbursement, Mar'ie said.

In a related development, he said that the realization of project construction reached 39.3 percent in the current fiscal year.

He assured that the lower realization of projects will not hamper the country's development, but said that good management will help accelerate the disbursement of the government's loans in the second semester. (fhp)