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Ministry warns construction SOEs not to use state budget to pay off debt
Multiple ministries have warned construction state-owned enterprises (SOEs) not to pay off their debt using state-budget funds earmarked for government-funded projects.
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A billboard showing the Wijaya Karya logo is installed near a construction site in Jakarta.
(kontan.co.id/Daniel Prabowo)
M
ultiple ministries have warned construction state-owned enterprises (SOEs) not to pay off their debt using state-budget funds earmarked for government-funded projects.
Public Works and Housing Minister (PUPR) Basuki Hadimuljono asked SOEs Minister Erick Thohir to ensure the state-run firms refrained from doing so, in a letter, according to the PUPR ministry.
“[That money] must be separated from the restructuring problem because not all of these restructuring actions are tied to the state budget,” said PUPR spokesperson Endra Atmawidjaja on Wednesday, as quoted from Kompas.com.
“If the cause of the failure to pay off loan interests or fulfill corporate obligations was the corporate actions, that is uncorrelated to the state budget. Say, for instance, [the default] was caused by the investment outside the infrastructure sector,” he added.
Read also: Govt eyeing limit on state-owned banks’ loans to construction SOEs
The letter included details about Rp 118 trillion (US$7.74 billion) worth of government funded national strategic projects (PSN) currently handled by construction SOEs, Endra added.
He explained that some of these projects have multiyear contracts, meaning they will get funds from the state budget for more than one fiscal year.
