Jakarta – The country's debt service ratio (DSR) is predicted to reach an alarming level of 49.3% in the current fiscal year ending in March next year.

The Jakarta Post quoted Minister of Finance Bambang Subianto as saying the figure was based on an estimate that principal debt servicing and interest payment would reach $US27.19 billion and exports would amount to $US55.16 billion this year, both were higher than the government's earlier projection.

Coordinating Minister for the Economy, Finance and Industry Ginandjar Kartasasmita in September estimated the debt service ratio would reach 44%. Before the economic crisis, the country's debt service ratio stood below 35%.

Total exports during Jan-Sept 1998 reached $US37.24 billion, a 5.73% decline from the same period of 1997. Total imports in the same period dropped 36.6% to $US20.15 billion, resulting from a sharp fall in oil and gas imports.

House member Thomas Suyatno meanwhile said the government should boost exports to bring down the debt service ratio. Increasing exports, he said, is one of the only two approaches the government could take in response to the alarming debt level. The other is delaying the debt repayment. Indonesia has not benefited from higher export revenues this year because of trade financing troubles, despite the rupiah's significant plunge which normally would make exports more competitive.

Export-oriented firms, especially those highly dependent on imported materials, have been facing difficulties securing letters of credit to import raw materials because of the low confidence in the local banks. The rupiah's sharp depreciation has also boosted the prices of imported products.