Southeast Asia

Oct 5, 2005

Indonesia to reduce its foreign loans next year

JAKARTA - The Indonesian government will reduce its obtainment of foreign loans in 2006 to only Rp30.5 trillion (US$2.97 billion) or 1% of the country's gross domestic product (GDP) compared to this year's Rp35.54 trillion.

"For 2006, we estimated that Indonesia`s need for foreign loans amounts to Rp30.5 trillion with a view to reducing the country`s foreign debt burden," Finance Minister Jusuf Anwar said during an annual meeting of the Consultative Group on Indonesia (CGI) in Jakarta.Under the 2005 state budget, the government paid Rp

40.38 trillion in foreign debts. At the same time, the government drew Rp 35.54 trillion in foreign loans bringing its foreign loan cost to Rp4.8 trillion, 0.2 per cent of Indonesia's GDP.

Jusuf Anwar said that to reduce its total foreign debt burden, the government will prioritize foreign funding sources in the form of grants (by the Consultative Group for Indonesia), soft loans (from Japan and multilateral organizations), debt swaps and moratoria (by some Paris Club members).

"The government has accepted a foreign debt moratorium for one year [2005] offered by the Paris Club and some other countries on bilateral basis. We do not have to pay the interest during the moratorium on debts under the moratorium, reducing our debts," he said.

He added that the government had also tried to reduce its debt burden by asking for an exemption from the commitment fees on project loans which have yet to be disbursed.

(Asia Pulse/ANTARA)

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