Paris – Indonesia's foreign government creditors on Friday said they had agreed to re-schedule a portion of the country's external debt service obligations.

The agreement, worked out here among Jakarta's official creditors in the Paris Club, will reduce Indonesia's debt service obligations between April 1, 2002 and December 31, 2003 from 7.5 billion dollars to a maximum of 2.7 billion, according to a club statement.

It said the re-scheduling was designed to "further support the continuing efforts on economic recovery undertaken by the government of Indonesia" under an International Monetary Fund program.

The agreement covers Indonesia's debt to the Paris Club falling due between April 1, 2002 and December 31, 2003. The total obligation for that period is 7.5 billion dollars, of which 5.4 billion was eligible for re-scheduling.

An Indonesian statement issued here expressed satisfaction with the terms that are to be applied to the portion of the debt eligible for re-scheduling.

"The re-scheduling of payments will include actual debt and interest within the consolidation period from April 2002 to December 2003 [21 months] to the amount of 5.4 billion dollars," the statement said.

The Paris Club noted that during that 21-month consolidation period Indonesia's debt service owed the club "will not exceed 2.7 billion dollars."

"We hope that this will really alleviate pressure on the budget and the balance of payments this year and next year," said Indonesian Coordinating Minister of Economic Affairs Dorojatun Kuntjoro-Jakti.

In their statement Indonesian officals noted that "the conditions of the re-scheduling payments of these foreign debts are better" than previous such accords.

Under terms of the agreement, official development assistance will be repaid over 20 years, with a 10-year grace period. Commercial credits will be reimbursed over 18 years, with five years of grace.

Indonesia has also agreed to seek re-scheduling arrangements with its other external creditors.