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

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)