Most Important Government Ploys
Savage, Shirley S., Global Finance
Indonesia will receive $5.9 billion in fresh funds from a World Bank-sponsored group of international lenders.The funds will help Indonesia finance a budget deficit said to be 5.8% of annual economic output for the fiscal year ending March 31 2000.While largescale food and medical shortfalls haven't happened, the World Bank still views the new funds as essential to keeping social programs intact in the country. But there are worries within the World Bank and among Indonesia's opposition parties that the country's debt is getting out of control. The latest funds will boost the government's borrowing to more than $70 billion. In order to rescue the country's banking system, the government will need almost $80 billion in additional funds.The current government is trying to tackle the rising-debt problem.And with elections coming up in November, sensitivity to the problem is rising, too.
Peru has issued $500 million in global bonds and will swap the whole issue for existing Brady bonds, freeing the US treasury collateral. The move implies more free cash flow for the government which will have to fund a nominal fiscal gap of 1.7-2% of GDP as the result of a major deterioration in tax revenues. According to Santiago Millan of Ideaglobal.com, the issue isn't merely designed to improve the liquidity of Peru's sovereign debt, but also to establish a new benchmark for the country's corporate issuers and improve its amortization profile. …