RI's offshore debts stand at $89b: Mar'ie

JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced yesterday that Indonesia's offshore debt stood at US$89 billion as of last June.

"According to our research along with the World Bank's, the country's offshore debts stood at around $89 billion at the end of June, $59.46 billion of which was owed by the government and some $29.5 billion by the private sector," Mar'ie said in a hearing with Commission VII of the House of Representatives (DPR) here.

Mar'ie's figure is slightly lower than that announced in April by Coordinating Minister for Economy and Finance Saleh Afiff, who placed the country's offshore debts at some $90 billion as of March.

During yesterday's hearing, Mar'ie said that out of the government's foreign debt, $22.26 billion was accrued under bilateral agreements with creditor countries, $18.58 billion under multilateral financing schemes, $13.37 billion under export financing schemes and $2.90 billion under commercial arrangements.

In addition, $1.37 billion was accrued under leasing arrangements, $99 million by floating bonds and $875.30 million was owed by the government from several years ago, he said.

Mar'ie said the government, in making new loans, will continue to put a high priority on bilateral and multilateral aid which offers loan concessions.

Indonesia in July received loan commitments of $5.2 billion from the creditor members of the World Bank-chaired Consultative Group on Indonesia (CGI).

Private sector

Mar'ie gave no details of the foreign loans owed by the private sector.

He assured reporters that, according to the latest report of Bank Indonesia, the central bank, the foreign debts of the private sector was not higher than $30 billion as of June.

"However, I warn the private sector not to borrow excessive amounts from foreign sources in order to keep the country's balance of payments at a convenient level," he said.

According to the government's budget plan, Indonesia expects a slight increase in its current account deficit to $3.2 billion this fiscal year from $2.82 billion estimated for last fiscal year -- but the country's balance of payments will likely more than double to $1.12 billion from $506 million.

Mar'ie said the bulk of the private sector's foreign loans have short terms of maturity.

"I expect that private sector businessmen are aware of the risks of accruing short-term borrowing," he said, adding that the government is not in a capacity to restrict the private sector from raising debts.

"What we can do is to make regular cross-checks with the central bank on the position of the private sector's foreign debts," Mar'ie said. "But it is possible that the private sector does not report their own foreign loans to the central bank."

He said the private sector should manage offshore debts, being careful to apply rigorous standards

For that purpose, the government has set up ceilings on offshore commercial borrowing, Mar'ie added.

Until next fiscal year, the ceiling on offshore commercial loans are set at $6.5 billion. The annual ceilings for foreign loans of the central bank, state banks and private banks are set at $500 million, $1.0 billion and $500 million, respectively.

Under the existing ceilings, private companies are permitted to borrow up to $2.8 billion from foreign creditors in this fiscal year and up to $2.9 billion next fiscal year. Meanwhile, the state companies are allowed to borrow up to $1.4 billion in the current fiscal year and up to $.16 billion in the next fiscal year. (fhp)