Monday, 31 January 2011

Reducing Overseas Debts, Now Government Focuses on Domestic Credit Resources

In the effort to reduce debts and maintain domestic liquidity, the Government would be more oriented to obtaining credit from domestic financial resources. This was disclosed by the Ministry of Finance, Agus Martowardojo to the press after attending the cabinet meeting at the Presidential office on Monday (12/7).

Furthermore the Ministry stated that beside obtaining local credit the Government also planned to jack up income from internal revenues. The Government believed that borrowing strategy was not just a matter of maintaining liquidity, but also to make sure that foreign debts be lowered in terms of net or gross “So we are more oriented to domestic credit resources if such were needed at all” the Minister remarked.

About the state’s income, whether tax or non tax, the plan was to expand it. The Government strived to increase income; in this case from tax and non tax resources, and natural resources. Debt management was deemed necessary whereby the Government may get credit of longer period and easy term and conditions, and without any political interest of the creditors.

Data of the Ministry of Finance noted that the Central Government’s outstanding position up to Semester I-2010 reached Rp. 1,612,85 trillion or equal to US$ 177.57 billion. The Debt Service Ratio against GDP was posted at 26%.

By end of June 2010, the Ministry of Finance noted that the nominal emittence of State Bonds (SBN) in Rupiah denominations reached US$ 96.81 billion while debts in foreign currency totaled US$ 17.25 billion. The emittence of bonds were mainly in the domestic stockmarket. The utilization would be for financing old debts, reducing overseas dependency and developing the domestic money market.

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