Jakarta – The Indonesian government's foreign debt totalled 71.4 billion dollars at the end of last year, top economics minister Dorodjatun Kuntjoro-Jakti said Monday.

He said government overseas debt amounted to 58.3 billion dollars and Bank Indonesia, the central bank, had foreign debts of 13.1 billion. Kuntjoro-Jakti, speaking after a cabinet meeting, said the government's domestic debt stood at 659 trillion rupiah (64.3 billion dollars.)

"The foreign debt is loans taken out by the government to cover the deficit of more than 30 years and especially to finance the construction of infrastructure which needs large investment funds," Kuntjoro-Jakti said.

The domestic debt, he said was mostly to finance efforts to revive and recapitalise the banking sector which was crippled by the economic crisis that struck the country from mid-1997.

Kuntjoro-Jakti said the cabinet discussed management of the country's debt and policies to address it. Among priorities were the gradual lowering of the budget deficit until a balanced budget is reached in 2004, the lowering of the ratio of debt to gross domestic product (GDP) to 60 percent by 2004, cautious new borrowing and raising of more tax and non-tax revenue.

Vice President Hamzah Haz said last week the country must pay debt interest of some 9.7 billion dollars a year. "Had this country been a company, we would have gone bankrupt," Haz said at the time. "It is more difficult to manage domestic debt than foreign debt," said Kuntjoro-Jakti, adding that interest on domestic debt accounts for about 3.5 percent of GDP.

Kuntjoro-Jakti said the government was in talks with Paris Club creditors over rescheduling the country's debts and was confident approval would be given in the forthcoming April meeting. "Based on our previous experience and preliminary talks with Paris Club creditors, the government is confident that the results of the Paris Club meeting will be in accordance with [the government's] expectation and plan," he said.

State Enterprise Minister Laksamana Sukardi said domestic debts would be repaid through the sales of assets held by the Indonesian Bank Restructuring Agency, through privatisation and – after 2004 – through a possible budget surplus.