No.

E 119
Public Disclosure Authorized

67028

This report is not to be published nor lnay

it be quoted as representing the Bank's views.
Public Disclosure Authorized

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PUBLIC EXTERNAL DEBT OF INDONESIA

Public Disclosure Authorized

Novelnber 15, 1950

Public Disclosure Authorized

Econolnic Departlnent
Prepared by: Andrew C. Huang
 ?IJBL Ie EXTERlJAL DEBT OF I!:IDOHESIA

Table of Contents

Page
1. Debt Outstanding 1

2. Service Payments

Appendi~ A - Table A-l: List of the External Debt of

Indonesia, October 31, 1950.
Table A-2: Estimated Interest and Amortization
Payments on the Exterr~l Debt of
Indones~a.

Appendix B - Text of Conditional Clause Relating to the

Terms of Payment in Indonesia I s Loan .~greements
with the U. S.

Appe~dix C - Text of Agreements Concerning Debts Settlement

Between the Netherlands Government and Indonesia.
 PUBLIC EXTERHAL D¥T OF nTOONESIA

As of October 1950 Indonesia's public external debt, out5tand1ng or

authorized, amounted to the equivalent of U.S.$515 million. Almost 6fr~

(U.S.$:302 million) of the obligation is in Dutch guilders and :35~ in U.S.

dollars ($180 million). The rest is composed of government loans from

Australia and Canada. The overall debt position of the Republic 1s sho'>Tn
in detail in Appendix Table A-I and is sUIllIllarized belo"T:

(In millions of U.S. dollars)

a) U.S. government loans
E.C.A. loans $ 17
Surplus Property Credit 62
EXIM-Ba~~ Credit~ 1QQ.
Sub-Total 179
b) Canadian government loan 14
c) Australian government loan 19
d) Dutch government loan** 302
.....--....-

Grand Total $514

* All undisbursed as of 10/:31/50.
** Excluding Indonesia's share in the currency
purchases of f 95 million from IHF ..

a) U. S. Government Loans - ~n thin the frame"rork of the E.C.A •• Indonesia

has received aid amounting to U.S.$17.2 million in the form of loans. The
principal is to be amortized in semi-annual installments commencing in June

1956. The interest at 2-1/2% is payable semi-annually beginning in June 1952.

The loan agreement provides the usual clause that service charge payments may

be postponed at any time due to adverse economic conditions or other reasons

when agreed upon bet,,,een the tt.ro governments.1I

11 . See Appendix B-1 !o~ details.

I.
 - 2 -

In July 1946, Indonesia obtained a line of credit in the amount of U.S.

$100 million for the purchase of surplus property prior to June 1948. The

interest on the loan ,'ras 2% per annum payable in July of each year beginning

in 1947. The principal amount is repayable in 30 annual installment$ starting

in 1951. As of June 1950, only about u.8.$62.7 million of the authorized

total had been utilized; the remaining credit has been terminated. A clause

similar to that found in the E.C.A. loan contract permitting postponement of

service charge payments is contained in the agreement 1,rhich also stipulated

that up to 8.$8.3 million of the service payments may be accepted in local

currency at the option of the U.S. government.lI

The 3-1/ Zfo EXIM....Bank line of credit of U. S. $100 million, gran ted in

February 1950, is intended for the development of transporta~ion and food

production. up to October 31, 1950, allotments totaling U.S.$29 million of

the credit had been made for the reconstruction of the country's hight\ray

system; no dra\·rings, hO"iever t have as yet taken place.

b) Canadian Government Loan - In October 1945, the Canadian Government

extended a 10-year loan for Can. $15 million to the Bank of the ;'etherlands

Indies. The loan bears interest at the rate of 2-1/2% per annum and is ex-

pected to be repaid before 1955.

c) Australian Government ;Loan - The 10-year ±tA 8.5 million 108.n obtained

in August 1949, free of interest, is to be used for the nurchase of surplus

commodities from the Australian government.

d) Dutch Government Loans - Indonesia's pre'-Tar indebtedness to the

Dutch government ,.ras consolidated at f 870.7 million, in the agreement of

the Round Table Conference of 1949 "r1 th the }lTetherlands Govern.1l1ent. The

section of the agreement dealing ,·,i th debts settlement is sho"rn in Appendix C.

,
See Appendix B-2 for details.
 - 3 -

In addition. t",'o loans "'ere granted by the Dutch Government in July 1950

in the aggregate amount of f 280 million. The one for f 200 million is a gen-

eral purpose loan, and the other for f 80 million is to be used for consoli-

dating the debt on the reconstruction account assumed by Indonesia as a result

of the Round Table Conference of 1949. The currency period for both loans is

11-1/2 yeC:.rs. l.ori th interest at 3-1/2% per annum.

2. Service Payments 11
Projected service charge payments are tabulated in detail in Appendix

Table A-2, and summarized beloyl:

(In millions of U.S. dollars)

Total Service ?ayments by
Tota,l Cur~~
Debt Out- Amorti- Service U. S.$ Can. $ tA Dutch G
Year standing ,zation Interest p&lts Debt Debt ~ , Debt

1950 515 13 10 23 2 * 2 19
1951 502 18 14 32 7 3 2 20
1952 485 18 14 32 7 3 2 20
1953 467 24 14 38 7 :3 2 26
1954 443 24 13 37 7 3 2 25
1955 418 26 12 38 9 3 2 24
1960 276 27 8 35 13 22
1970 65 15 2 17 9 8
1974 21 9 ** 9 2 7

'" Amounting to about $171,000.

Amounting to about $485,000.
**
Total interest payments approximate U. S.$10 million in 1950 and declinE

steadily from an annual average of $14 million batT"Ren 1951-55 to about :~8 mil-

lion in 1960 and $2 million in 1970. Amortization NUl rise from $13 million

in 1950 to $26 million in 1955 atld $29 million betT,reen 1956-59, and thereafter

decline rapld~ from ~27 million in 1960 to about $9 million in 1974. Total

.-
11 Prior to i'lorld ';Jar II. there l!ras no record of default on any ;Jub1ic exter-
nal obligation of the ~Tetherlands East Indies. Payments of debt services
',rh1ch "lere temporar1ly interrupted by the German invasion of the ~~ether­
lands in May 1940, 1,.rere resumed ,,'1 thin a short period.
 -4-

service charges ,,/ill ra.'Ilge bet1'reen $23 million and $40 million during 19.50-64.

Commencing in 196.5, ho"rever, they are expected to decrease from $22 million

to about ~17 million in 1970 and thereafter. The interest and the principal

payments in Dutch guilders average about 6.5% of the total bet,·reen 19.50-74

except during 1964-70, '1Then about half of the gross payments "ri11 be applied

to U.S. governmental loans then maturing.

 Table A-I: LIST OF THE EXTERNAL DEEr OF INDONESIA, OCTOBER 31, 1950
(In thousands)

Amount author- Amount outstandiu;.;.,gol..·-=-...,..-

ized in origi- In currency Expressed'in
nal currency of payment U~S~ dollars

U.S. DOLLAR DEBT

Government loans
E.C.Ao 2 1/2%, 1948-1974 us;,;, 17.9 20°,11 I US;,p 17,200 17,200
Surplus property, 2%, 1947-1980 100,OOQ:;{ 62,319 62,319
Export-Import bank, 3 1/2;;;,
1950-1970 Y 100,000 100,000 100,000
Total Uo So dollar debt 179 2519
CANADIAN DOLLAR DEBT
Government loan, 2 1/4%, 1945-1955 Can ~ 15,50oJ! Can $ 15,452 13,984
AUST1~\LIAN POu~DDEBT
Government loan (free of interest)
1950-1959 ' 8,500 8,500 18,938
GUILDER DEBT
Netherlands Gover~ment loan, 3 1/2%,
1950-1963 W £ 80,000 £ 80,000 21,025
Netherlands Government loan, 3 1/2%,
1950-1963 W £ 200,000 f 200JOOO 52,562
Consolidated Government 10an~ f 870,737 f 870,737 228,838
Total guilder debt lQ3.?E2
GlliUm TOTAL 51Lf,86ri!

Y Of this total ~1)37,286,000 was terminated and ~62, 713,000 utilized as of

6/30/50.
31 Undisbursed as of 10/31/50 0
11 The equivalent of this amount in U.S. dollars is ~(14,027,190,
11 As of 6/30/50 0
21 The components of the consolidated loans are shorm ill Appendix C.
§/ Excluding f 95,000,000 currency purchase from I.I<:I.F.
 T~ble A-2~ ESTIi'l.A.T::;n Il\fTI'JC.=ST MID 11.HORTIZii.TIOlif PAYi\lLI\lTS ON TH:: D:JBT OF IEDOlffiSIA

(Expressed in thousands of U.S. dollars)

Pa.ge 1
U.S. Govornmont debt Canadiell Government loan .Australian Governmen~t loan
Amount ?<!y'f,ien'i;s iiIllocmt - Pa~::::J.ents ;.mount :pailments
Year
out- ArJorti·- In-
Total 01.1.t- il..:.10rt i-- In-
Total out- .illnorti- 1n-
standing zation ter§st stgn~ing zation te;t;:est standing zatiQll terest Total
1950 179,51911 -2,077 2,121 2.. 121 13,984 171 171 18,938 1,894 1,894
1951 179,519 4,746 6~823 13, 98L~ 2,796 312 3,108 17,044 1,8911- 1,894
1952 177,442 2,077 4,920 6,997 11,187 2,796 236 3,032 15,150 1,894 1,894
1953 175,365 2,077 5,093 7,170 81 391 2,796 173 2,969 13,256 1,894 1,894
1954 1'73.288 2,077 5,052 '7,129 5,595 2,796 110 2,906 11,362 1,894 1,894
1955 171,211 3,744 5,010 8~ '754 2,798 2,798 47 2,845 9~468 1,894 1,894
1956 167,467 9.695 4,847 14,5Lr2 7,574 1,894 l,B94
1957 1571772 9 695
1 4,546 14,241 5,680 1,894 1,894
1958 148~077 9,695 4,248 13~943 3,786 1,894 1,894
1959 138,382 9,695 3,950 13,645 1,892 1,892 )".892
1960 128,687 9~695 3~652 131347
1961 118,992 9,695 3,35.3 13,048
1962 109,297 9,695 3,055 12,750
196.3 99,602 9,695 2,755 12,450
1964 89,907 9,695 2,456 12~151
1965 80,212 9,695 2,159 11,854
1966 70,517 9J 695 1~858 11,553
1967 60,822 9,695 1.560 11,255
1968 51,127 9.695 1,264 10,959
1969 41,432 9,695 964 lOw 659
1970 31,737 8,008 665 8,673
1971 2.3,729 3,027 484 3,511
1972 20,702 3.027 418 3,445
1973 17,675 3,127 353 3,480
1974 14,548 2,07'1 291 2,368

See footnote at end. of table,

 Table A-2,: I~STnIAT:;:;D INT:cru::;ST AND AHORTIZATIOl~ PAn-reNTS on THE I:;XTERlJAL DEBT OF UIDOlIJDSIA - Contd •.
(E:rpressed in thousands of U.S. dollars)
Page 2
Hetherll'.nds Governmerrt loan G:rand total
Year Amonn:t Pa;yments An!ount Pa;'lments
out- iunorti- In- Total out- Amorti- In- Total
ste,ncUng zation terest standing zation terest
1950 302,425 10,809 8,201 19,010 514~866 12,703 10,493 23,196
1951 291,616 10,809 9,163 19,972 502 1 163 17,576 14,221 31,797
1952 280,807 10,809 8,836 19,645 484~586 17,576 13,992 31,568
1953 269,999 17,528 8,448 25,976 467 1 011 24,295 13,714 38,009
1954 252,470 1'7,528 7,885 25~413 442,715 24,295 13,047 37,342
1955 234,942 17)528 7,}21 24,849 418,1}19 25.9611- 12,378 38,342
1956 217~414 17,528 6~758 24 p 286 39 2i 455 29,117 ll,605 40,722
1957 199,885 17,528 6,195 23 7 723 363,337 29,117 10,741 39,858
1958 182.357 17,528 5,632 23,160 334,220 29,117 9,880 38,997
1959 164~828 17,528 5,069 22,597 3059 102 29,115 9,019 38,134
1960 147,300 17,528 4,506 22 p 034 275,987 27.223 8,158 35.381
1961 129,772 17,528 3,942 21,470 2l l-8, 764 27,223 7,295 Ji},518
1962 112,243 17,528 3,379 20,907 221 i 540 27,223 6,434 33,657
1963 94~ 715 13p584 2,810 16,394 194 )317 23,279 5,565 28,844
1964 81,130 9,653 2,450 12,103 171,037 19,348 4,906 2 J+, 254
1965 71,478 8,251 2,158 10,409 151,690 17$946 4,317 22,263
1966 63 1 227 8,251 1~906 10,157 133,744 17J946 3,764 21,710
1967 54,976 8,251 1,658 9 t 909 115,798 17,946 ),218 21,164
1968 46,725 6,937 1,409 8,346 97,852 16.632 2,67} 19.305
1969 39)788 6.937 1~198 8,135 81t220 16,632 2i l62 18,794
1970 32 ,851 6 s 938 988 7,926 64,588 14,946 1,653 16 t 599
1971 25 1 913 6ij478 777 7,255 49,642 9~505 1,261 10,766
1972 19,L~35 6,478 583 7,061 40~137 9,505 1,001 10,506
1973 12,957 6p 478 389 6,867 30,632 9,605 742 10,347
1974 6,478 6,478 194 6,672 21~026 8,555 485 9,040

Y Includes $100,000, 000 loan from Export-Import Bank \'1hich was undisbursed as of 10/31/50.
 : I

APPENDIX ::B

Text of Conditional Clause Relating to the Terms of

Payment in Indonesia i s Loan Agreements lor! th the U. S.

Article 4

If at any time or from time to time the parties hereto determine that
it "rould be in their common interests because of adverse economic conditions
or for any other reasons to postpone, or provide for the postponement of,
a~ installments of interest or principal, or to alter or previde for the
alteration of any provisions of the aforesaid promissory note relating to
payment of interest and principal, or to modify the aforesaid promissory
note in any other respect, they may by mutual agreement in ,'?riting l)rovide
for a~ such postponement or alteration or other modification.

(2) Surplus Property Credi tJJ

Article 2 - Section D

If by agreement of both Governments it is determined that because of

extraordinary and adverse economic condi tions arising during the cou:cse of
payment, any of the periodic payments of interest, of principal, of interest
and principal, or of any part thereof "rould not be to the common advantage
of both Governments, payment may be postponed on such terms and conditions
as may,be agreed.

Article 3 - Provision of Netherlands Indies Currency and of Pronerty

Section A~ The Netherlands Indies Government, l.rhen requeflted by the

United states Government, 1/Till make available at a'!;ly time or times, by
payment to the United states Government or to such persons or orga..'1iza.tions
as the United States Government may designate, Netherlands Indies currency
in any amount (computed as provided in sub-paragraph 3E of this Agreement)
not in excess of the amount due as of such time plus past due interest, for:

1) The payment of any or all of the ordinary governmental

expendi tures in the Netherlands Indies of the United
States Government or aD1 department or agency thereof;

2) The acquisition of real property, improvements thereon

or furnishings therefor, agreed UpOn by the t,·,o Govern-
ments; and

See: Agreement Betl!reen the Government of the lIetherlands on behalf

of Indonesia) and :Export-Import ::Bank of '1!ashington of the 28th
October, 1948.
?J See: Agreement Batt-reen the Government of the U. S .A. and the Government
of the Netherlands Indies of 5/28/47 Re~arding a Line of Credit
for the Purohase of U,S. Surplg§ Property.
 , I

3) The payment of the cost of educational programs agreed

upon by the t"ro Governments.
Section C. The United States Government declares that it is nO',T its
intention to request that Netherlands Indies currency be made available
for agreed educational programs under sub-paragraph 3A of this Agreement
to the value of $7.000.000 and that it is nO'!T its intention to reQ.uest
that Netherlands Indies currency be made available for, or that there be
delivered. real property, improvements and furnishings, or both, under
sub-paragraphs 3A and 3B of this Agreement to the value of $1,300,000.

This statement of intention does not prevent the United states Government
from later proposing different amo~ts from these in these connections.
The foregoing amounts are inclusive of amounts heretofore renuested w.der
corresponding arrangements hitherto existing under the line of credit.
 ,{IJ'PENDIX 0
Text of Agreements Concerning Debts Settlement
:Bet1FTeen the Netherlands Government and Indonesia

Settlement of Debts
Article 25
liThe Republic of the United States of Indonesia shall assume the follo~,r­
ing debts:

A. The follo~rlng consolidated loans. calculated as of December 31. 1949:

1. The Netherlands-Indies Loan 1935 bearing interest at the rate of
3-1/2%. issued under the Netherlands-Indies Loan Act 1934 (Staatsblad ITo.
558) j. The Netherlands-Indies Conversion-Loan Act 1934 (Staatsblad ~To. 425)
as amended by Act of 1 November 1934 (staatsblad '1::0. 559). Amount o'ltstan-
ding as of 31 December 1949. f 36 650 000.-. Remaining duration 21 years,
2. The Netherlands-Indies Conversion-Loan 1937 bearing interest at the
rate of 3%. issued under the Netherlands-Indies Conversion Loan Act 1934
(Staatsblad No. 245) • •~ount outstanding as of 31 December 1949. f 90 000 000.-
Remaining duration 18 years.
3. The Netherlands~Indies Loan 1937 A bearing interest at the rate of
3%, issued under the }Jetherlands-Indies Conversion Loan Act 1937 (Staatsblad
No. 904). Amount outstanding as of 31 December 1949, f 616 250 000.--
Remaining duration 25 years.
4. Indonesia's share of the Netherlands National Consoli1ated Debt 1896
bearing interest at the rate of 3% (Act of 30 December 1895, Staatsblad Yo.
236). Amount outstanding as of 31 December 1949, f 3 300 000.--
Remaining duration 3 years.
5. The 3% Indonesian Loan 1962-1964 (Agreement of 19 May/8 June 1949)
being Indonesia's share converted under paragraph 2, article 4 of the Agree-
ment of 8-14 April 1938, in the 3-3~ ~retheTlands Government Loan 1938,
",hieh loan t'Tas converted under the Conversion Loan Act 1948 (Staatabled fTo.
I 115) and the Loan Act 1946 (Staatsb1ad No. G 143), amended by the Acts of
23 November 1946 (Staatsblad Yo. G 333) and of 12 February 1948 (Staatsblad
No. I 52). Amount outstanding as of 31 December 1949, f 29 912 000.--.
which amount must be redeemed in full on 1 June 1964.

6. Loans contracted ",1 th SIDe lTederlandsche Bankll and !fDe Javasche Bank"
bearing interest at the rate of 3% (~greements of 14 and 16 January 1932,
amended on 28 December 1932) against collateral of ~Tetherlands Treasury Bills
set at the disposal of Indonesia under the Act of 25 July 1932 (Staat$blad
No. 393), amended by the Act of 15 Harch 1933 (staatsblad }TO. 99). Amount
outstanding as of 31 December 1949, total f 44 624 225.--. Remaining dura-
tion 13i years.
 B. The debts to third countries, calculated as of 31 December 1949:

1. Loan Export-Import Bank on behalf of Indonesia ','11 thin the fra.1!'le"'ork

of the E.C.A. aid (Agreement of 28 October 1948). Amount outste~ding as of
December 31. 1949. U.S.$ 15 000 OQO.--. Remaining duration 24 years. Interest
at the rate of 2~, as from 30 June 1952.
2. A line of credit granted by the United States Government to the ~eth­
er1and.s Indies Government for the purchase of United States Surplus Property
(Agreement of 28M~ 1947). Amount outstanding as of 31 December 1949. u.s.
$62 550 412.--. Remaining duration 31~ years. Interest at the rate of ~;.
3. Loan from Canada (Agreement of 9 October 1945). Amount outstanding
as of 31 December 1949, Can. $15 452 188.21. Remaining duration 6 years.
Interest at the rate of 2-1/4%.
4. Settlement betl.veen the Government of Australia and the Governr;;.ent of
Indonesia (Agreement of 17 August 1949). Amount outstanding as of 31 ·.)ecember
1949. A. ~8 500 000/--/--. Remaining duration 10 years. Free of interest.
C. The fo11o\llJing debts to the Kingdom of the i.ITetherlands, caleule.ted as
of 31 December 1949, up to the maximum amounts specified hereunder:
1. Indonesia's share in the s~'Ting provided in the British Monetar,y
Agreement, ad ~ S 000 OOQ}-/-. (f 5'2 SOO ,000.-)

2. A swing to the C-account of f 40 000 000.--

3. The debit balances on the EG/EI-account of f 80 000 000.--

4. The debit "balance on the Bretton 'roods accounts, of f 25 000 000.-
(Opposite this is an asset of the same amount as participation in Interfund
and Interbank.)
D. All internal d.ebts of Indonesia at the date of transfer of sovereignty.

Article 26
The Government of the Republic of the lJnited States of Indonesia assumes
responsibility for p~ment of both interest and. amortization of the debts
referred to in the previous article and acquires as rege,rds the debts unrler C
the rights und~r the existing agreements.

Article 27

The remaining debts of the Body-Corporate of Indonesia to the I~ingdom of

the Netherlands at the date of transfer of sovereignty shall be deemed can-
celled after the debts of the Kingdom of the ::retherlands to the Body-Corporate
of Indonesia at the same date have been offset, ".'hieh involves a redllOtion of
the external debt due to the TIetherlands by the sum calculated as of )1 Decem-
ber 1949, of 2 000 ~OO 000 Netherlands guilders."

Source: Round Table Conference. held on 2 l~ovember ;1.949 in the "Riclderzaal ll

at the Hague.