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Jakarta Post

Govt warns companies on foreign debt

  • Esther Samboh

    The Jakarta Post

Jakarta   /   Fri, August 26 2011   /  08:00 am

Finance Minister Agus Martowardojo says Indonesian companies should be wary of foreign borrowing given the global economy’s uncertain outlook.

Agus said the weakening US dollar had attracted many local companies to raise more dollar-denominated debts either through bank loans or through global bond issuances.

However the risk of foreign borrowing was higher given global economic uncertainties, he said, especially for companies that lacked adequate foreign currency revenue streams.

“If a firm’s revenues are in rupiah and its borrowings are in foreign funds, it might create currency risks,” he told reporters after government coordination meeting held by Bank Indonesia (BI) at its headquarters in Jakarta.

“Therefore, if there’s not a good mechanism, we suggest avoiding foreign borrowing because it is individually and nationally dangerous,” he added....