RI's foreign debt tops $117 billion
RI's foreign debt tops $117 billion
JAKARTA (JP): Minister of Finance Mar'ie Muhammad revealed
yesterday that the country's foreign debt stood at US$117 billion
as of September, a 7.3 percent increase from $109.3 billion
recorded in March.
Mar'ie said in a written reply to questions by the House of
Representatives Commission VIII for state budget and finance that
the government's debt decreased to $52.3 billion from $53.3
billion.
But private sector debt rose to $65 billion due to an increase
in investment activities.
"At the end of the current 1997/1998 fiscal year (in March),
our total debt-to-service ratio (the ratio of foreign debt to
export revenue) is expected to stand at 34.5 percent," Mar'ie
said.
Initially, the government predicted the country's debt-to-
service ratio would be 31.2 percent by the end of the fiscal
year, with government debt accounting for 11.8 percent, private
sector 17.8 percent and state firms 1.6 percent.
To reduce the debt-to-service ratio, Mar'ie said the
government would impose stricter requirements on the private
sector's foreign loans and would step up efforts to increase
exports.
"To reduce the burden on our balance of payments, we need to
curb private-sector borrowing," Mar'ie said.
Meanwhile, the government would continue to adhere to prudent
debt management by repaying foreign loans that carried high
interest rates ahead of schedule.
Mar'ie said most of the government's offshore loans were
provided under either bilateral or multilateral arrangements,
which had long-term maturity and carried low interest rates.
Of the government's outstanding debt, $20.63 billion was made
under bilateral arrangements, carrying an average interest rate
of 2.6 percent.
The other $16.01 billion was borrowed though multilateral
deals, carrying an average interest rate of 7 percent annually.
Another $14.5 billion in external loans was provided in the
form of credit exports, $9.96 million in commercial loans, $1.1
billion in lease deals and the remaining $54,000 in bonds.
Mar'ie said the sharp depreciation of the rupiah against the
U.S. dollar would increase the burden on the current state
budget.
He said every drop of Rp 100 against the dollar would increase
the government's foreign debt servicing burden by Rp 500 billion
($145 million).
"Therefore, if the depreciation continues until the end of the
current 1997/1998 fiscal year, it will add to the burden of our
foreign debt servicing," Mar'ie said.
The Indonesian rupiah has depreciated by about 35 percent
against the U.S. dollar since early July, from about 2,450 to
3,450 yesterday.
He said that as of last June, 43.3 percent of Indonesia's
offshore loans were denominated in U.S. dollars, 39.5 percent in
Japanese yen and the remaining 17.2 percent in other currencies.
"The government will continue to pursue prudent foreign debt
management so that foreign debt servicing will not adversely
affect our routine budget," Mar'ie said.
He said the government had spent Rp 9.56 trillion in the first
half of this year to service its foreign debt.
For the second half of the fiscal year, the government will
have to earmark $4.7 billion to pay the principal and interest of
its external loans.
During the second half, Mar'ie said, the government would
receive some $3.4 billion in new loans within the framework of
the Consultative Group on Indonesia. This does not include $6
billion to be withdrawn from multilateral institutions under the
International Monetary Fund (IMF) bailout package.
But funds from the IMF would mainly be used to support
Indonesia's real estate sector reform program and macroeconomic
adjustment.
In addition to the IMF-led loan commitments, Mar'ie said, the
government still maintained standby loans from several commercial
banks totaling $2.04 billion to safeguard Indonesia's balance of
payments.
Such standby loans were deemed necessary, considering capital
inflow was expected to drop significantly. (rid)