The External Financing of Indonesia's Imports (Special Series on Mixed Credits, in Collaboration with ICEPS)

Foreign borrowing as a source of additional savings can be valuable to a nation whose supply of long-term investment funds is scarce, relative to the amount of its productive investment opportunities. Indonesia is an example of such a country. It has abundant investment opportunities, but because of a limited capital market has financed many of its development projects from international sources. It has maintained a policy of restricting foreign commercial borrowing while maximizing the share of funds from multilateral and bilateral sources at preferential terms. At the end of 1986, Indonesia's total outstanding external debt was estimated at $43.5 billion, 43 per cent of which was denominated in US dollars, and 22 per cent in Japanese yen. The current rates of public foreign debt services to exports is in the 30 per cent range and the rates of total foreign debt service to exports is in the 40 per cent range. Since 1984, the co-ordination of debt management and trade ...