RI stresses continuity to potential investors
RI stresses continuity to potential investors
Dow Jones, Singapore
As Indonesia prepares to sell a global bond next year, an A-
list of the country's economic decision-makers stressed to
potential investors Monday the country will continue to stabilize
economically, even as it graduates from the International
Monetary Fund's (IMF) loan program at the end of this year.
The team, including Bank Indonesia Governor Burhanuddin
Abdullah, Finance Minister Boedino, Minister of State Owned
Enterprises Laksamana Sukardi and a slew of other members of
parliament, was in Singapore Monday to meet investors. The
roadshow will move on to Hong Kong and Japan later this week.
Interest in the Indonesian sovereign issue at recent roadshows
in Dubai, London and New York has already proven strong. The
government is now leaning toward a US$600 million issue, larger
than the $400 million originally touted.
Indonesia is also preparing to quit the six year-long IMF
lending program at the end of the year. It was forced to borrow
from the multilateral institution, as well as other bodies and
countries, after the Indonesian economy nearly collapsed in 1998,
and reliance on the fund has long been a sore topic with
Indonesians.
Indonesia will be holding a presidential election next year
and there are already some jitters about social instability in
the run-up to the July poll.
"Going forward, Indonesia is going to continue to stabilize
its economy," Governor Burhanuddin told investors. "Indonesia
needs economic stability because there will be no development
without stability."
He said Indonesia had seen "robust" economic growth this year
- the economy expanded 3.93 percent on year in the third quarter
- and he hoped for an expansion of 4.8 percent to 5 percent in
2004. He forecast debt as a percentage of GDP would drop to 55
percent this year and to 47 percent next year.
He added the country would remain committed to a floating
exchange rate regime, continue to build up reserves, and pursue
reforms in the financial system.
Finance Minister Boedino noted the country had been preparing
to exit the IMF lending program for a long time. "There will be
continuity of policy in 2004 and beyond," he said.
The government is still seeking a balanced budget by 2006, he
said. The 2004 budget, approved by parliament Nov. 10, outlined a
budget deficit of 1.2 percent of GDP and the current
administration will also have huge input into the 2005 budget.
He forecast a budget deficit of Rp 24.4 trillion year and Rp
9.0 trillion in 2005. Government bond issues, domestically and
overseas, are expected to total Rp 32.5 trillion next year, Rp
37.9 trillion in 2005 and Rp 41.0 trillion in 2006, he said.
Meanwhile, State Owned Enterprises Minister Laksamana stressed
that while Indonesia has had some difficulties in the past, such
as the involvement of the military in politics and poor corporate
governance, which deterred investors, that had now changed.
"Indonesia is like a good car from Mercedes or BMW; the
battery is flat so we need to jump start the battery, so here we
are," he said.
The priority for his department is ongoing privatization of
the banking sector and privatization of highly competitive
sectors such as hotels and plantations.
He forecast privatization proceeds would exceed Rp 6.4
trillion in 2003, with an estimated Rp 1.5 trillion coming from
the sale of Perusahaan Gas Negara.