WB sees RI's debt service ratio level still manageable

WB sees RI's debt service ratio level still manageable

JAKARTA (JP): World Bank country director Dennis de Tray said
on Thursday that Indonesia's nearly 50 percent debt service ratio
in the current 1998/1999 fiscal year was still manageable,
although it had risen to an alarming level.

De Tray said that the government had no better options than to
secure external official loans, including from the World Bank, to
finance the various economic reform programs and the social
safety net programs which would help the poor survive the 18-
month long economic crisis.

"Indonesia has to accumulate huge foreign debts because of the
economic problems," he said.

He added that plugging the huge budget deficit through
domestic financing by printing money was a bad option as it would
only create more hardships, particularly an uncontrollable
inflation rate.

De Tray was speaking to a small group of reporters, explaining
the bank's programs and priorities for the country.

"It's still manageable," he said when asked to comment on the
country's alarming debt service ratio level.

Finance Minister Bambang Subianto told the House of
Representatives on Tuesday that the debt service ratio -- the
ratio between debt servicing and export earnings -- might reach
49.3 percent in the current fiscal year ending in March 1999.

This estimate was higher than the government's earlier
projection.

The Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita projected in September the debt service
ratio at 44 percent.

Bambang said that the new projection was based on forecasts of
the principal and interest payments of sovereign and private
debts amounting to US$27.19 billion this year, and the total
predicted export earnings of $55.16 billion.

De Tray said that the Indonesian government, compared to the
private sector, had been doing well in managing its foreign debts
during the past eight years.

However, he said that although securing soft-term official
loans would minimize the debt burden, the large size of the debts
would surely affect the country's capacity to finance future
activities.

"We're struggling with this problem," he said. (rei)