Tue, 02 Aug 1994

RI's foreign debt still at safe level: Saleh Affif

JAKARTA (JP): Indonesia's considerable offshore borrowing is still at a safe level because it has soft terms with low interest rates and long grace periods, a minister says.

Coordinating Minister for Economy and Finance Saleh Afiff told reporters after a ministerial meeting yesterday Indonesia has been relying on its official borrowing from the Consultative Group on Indonesia, whose members annually pledge loans mostly with favorable terms.

"The government also gets export credits with interest rates lower than that on other commercial loans," Saleh said, adding that the government has appointed a special team to control the inflow and management of offshore commercial loans.

According to State Minister of National Development Planning/ Chairman of the National Development Planning Board (Bappenas) Ginandjar Kartasasmita, Indonesia's total offshore borrowing as of March stood at US$83.3 billion, of which $55 billion or 66 percent was borrowed by the government and the remainder by the private sector.

He said 71.3 percent of government's debt, or $39.2 billion, has soft terms with low interest rates and low maturity.

Sumitro Djojohadikusumo, a prominent economist, said on the weekend that the government is managing foreign debt very well and has used it for productive projects.

Blue book

Saleh explained that the use of foreign loans should be done according to a blue book prepared by Bappenas. "The blue book mentions priority projects and the use of loans should be in line with it," Saleh said.

Saleh warned recently that Indonesian companies should restrain themselves from new commercial borrowing to help the nation's total debt stay below the psychological barrier of $100 billion. Otherwise, it could affect the country's balance of payments and its credibility.

Saleh also dismissed rumors saying that $20 billion of the aid pledged by the country's donors has not been disbursed. "Although I don't know the exact amount I don't think it is that much," Saleh said, adding that the loans are given out in several phases according to the schedules of projects.

Meanwhile, Coordinating Minister for Trade and Industry Hartarto said that they discussed several points in yesterday's meeting including measures to maintain economic stability by controlling inflation and improving the development of the industry, tourism, investment and agriculture sectors. (yns)