RI and France sign debt swap agreement

RI and France sign debt swap agreement

Agence France-Presse, Jakarta

The Indonesian government has signed an initial agreement with France to convert US$65 million' worth of Jakarta's debt into local currency via a sale to investors, it was announced Friday.

The main objective of the memorandum of understanding is to boost foreign direct investment in Indonesia, said a statement from the Indonesian economics ministry.

It said the $65 million debt available under the conversion scheme represents part of Indonesia's outstanding debt to France as of March 31, 2000. The amount may be increased as agreed by the two governments.

Under the agreement, France will sell the eligible claims above a minimum price to investors. The investor who buys the claims can swap them against proceeds in rupiah.

It said the Indonesian government will pay a given price in rupiah to the investor in exchange for the French claims.

All non-resident investors in Indonesia whose projects have been approved by the authorities may buy part of the eligible claims.

Foreign Minister Hassan Wirayuda is due to arrive in France Friday to start an eight-day European visit that will also take him to Austria, Slovenia and Portugal.

Approved foreign investment in Indonesia fell last year by 35 percent but it rose sharply in the first quarter of this year to $2.49 billion, almost double the total for the same period in 2002.