Private sector foreign debt to reach $9.2b

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Nana said that the decree was rescinded because Bank Indonesia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)