Private sector foreign debt to reach $9.2b

JAKARTA (JP): The private sector foreign debt falling due in the fourth quarter of this year is estimated to reach more than US$9.2 billion, according to a senior official at Bank Indonesia.

Bank Indonesia's director for foreign affairs Nana Supriana said Wednesday that this was comprised of $8.7 billion owed by non-banking sector firms, and $480 million owed by the banking sector.

But Nana said that the maturity of such a huge amount of debt during the period between October and December would not cause a sharp increase in demand for the American greenback because the greater part of the debt was owed by subsidiaries of foreign companies.

Speaking at a media briefing, he explained that more than 50 percent of the debt owed by non-bank firms was owed by foreign investment firms or subsidiaries of multinationals whose dollar needs would be supplied by their overseas parent companies.

He also said that the central bank was still studying the potential dollar demand from local non-bank firms.

But he said that based on previous experience, firms were usually already prepared in respect of their foreign exchange needs.

"So, let's hope that this will not have too much impact on dollar demand," Nana said.

Nana stated that the country's private sector foreign debt totaled $68.2 billion.

He said that this comprised $10.1 billion owed by banks, $28.2 billion by non-bank foreign investment firms, $5.2 billion by state enterprises, and the remainder by local non-bank firms.

He also said that some $6.8 billion owed by non-bank firms and $1.1 billion owed by the banking sector was to fall due in the third quarter of this year.

Analysts have expressed fears that the surge in matured debts in the fourth quarter could result in more pressure on the already weak rupiah.

The rupiah ended lower at Rp 8,820 per U.S. dollar late on Wednesday compared to 8,730 on Tuesday.

One of the factors affecting the rupiah exchange rate is the size of dollar demand including that from companies trying to repay their foreign debt.

In other comments, Nana denied news reports that companies, banks, and individuals were no longer required to report to the central bank about their foreign debt deals following the recent scrapping by President Abdurrahman Wahid of the 1998 presidential decree governing the obligation.

Nana said that the decree was rescinded because Bank Indonesia had been equipped with a new central bank law since last year, under which one of the responsibilities of the bank was to monitor foreign exchange flows into the country.

He said that the presidential decree on the requirement for local businesses to report to the central bank on their foreign debt transactions would be replaced by a Bank Indonesia regulation which was now being finalized.(rei)