An Indonesian bears $600 in debt
Urip Hudiono, The Jakarta Post, Jakarta
The fact that one in five Indonesians still lives
on less than US$1 a day is made even gloomier by the fact
that every person in the country -- including those extremely
poor and even newborn babies -- already has nearly Rp 6
million (US$600) in debt to shoulder.
Such a sad, but true reality was unveiled
on Monday when Minister of Finance Jusuf Anwar told the
House of Representatives' Commission XI for financial affairs
that Indonesia's outstanding debt through this year's first
quarter amounted to Rp 1.28 quadrillion (some US$128 billion),
or 52 percent of the 220-million population's gross domestic
product (GDP).
The debt stock consists of foreign debts worth
Rp 624 trillion and Rp 658 trillion in domestic debts, coming
mainly from foreign creditors in the form of loans and from
the market through government bond issues, respectively.
Jusuf said the debt portfolio was also prone
to several risks, including refinancing risks due to an
imbalance in the maturation of the debts and market risks
from fluctuations of the rupiah and interest rates.
"The government's long-term debt management
goal is to minimize these risks," he said, mentioning
such measures as buying back and extending the bonds, increasing
the portion of bonds with fixed interest rates and only
accepting soft loans with a maximum interest of 3.5 percent.
The finance ministry previously estimated
that for every Rp 100 depreciation of the rupiah against
the U.S. dollar, the government would have to bear an additional
Rp 6 billion in interest payments, while every 1 percent
increase in interest rates costs Rp 2.2 trillion.
State Minister for National Development Planning
Sri Mulyani Indrawati, who also attended the hearing, however
was upbeat that the government would be able to lower Indonesia's
current debt as a percentage of GDP to 30 percent by 2009.
President Susilo Bambang Yudhoyono's administration
is aiming to reduce the country's debt-to-GDP ratio to 43
percent next year, from 49 percent estimated for this year
-- an improvement from a 75 percent debt ratio in 2001.
"We plan to do this by continuously reducing
the budget deficit while boosting our economic growth, particularly
through exports," she said.
Mulyani added that the government would limit
its net bond issues to a maximum of 1 percent of the GDP
and gradually reduce its foreign loans by between $1 billion
and $2 billion every year.
In the future, the government will also prioritize
negotiations only with major creditors, focusing on more
flexible program loans, rather than fixed project loans.
Meanwhile, Bank Indonesia (BI) Senior Deputy
Governor Miranda S. Gultom expected the government to issue
its short-term treasury bills soon to replace the central
bank's SBI promissory notes as a more effective money-market
instrument.
BI has so far acquired Rp 10.4 trillion in
bonds from the secondary market as part of its stock-building
strategy to later use them -- apart from the SBI notes --
for its monetary operations.
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