Big parties agree on CGI loan program<\/p>\n
JAKARTA (JP): The five major political parties, except the
\nNational Mandate Party (PAN), agreed on Monday that Indonesia's
\ncreditors continue loan disbursements to plug the current state
\nbudget deficit.<\/p>\n
The five party leaders expressed their views at a closed-door
\nmeeting with World Bank resident staff and discussed the agenda
\nof the upcoming meeting of the Consultative Group on Indonesia
\n(CGI) in Paris early next week.<\/p>\n
Kwik Kian Gie, a representative from the Indonesian Democratic
\nParty of Struggle (PDI Perjuangan), the front-runner of the June
\n7 elections, announced after the meeting that his party supported
\nthe continued disbursement of loans from CGI creditors.<\/p>\n
\"The current budget deficit should be covered,\" Kwik said in
\nreference to the government's plan to ask for new loans from CGI
\nat its Paris meeting next week.<\/p>\n
He warned, though, that as far as state spending was concerned
\nthe current government was entitled to propose a budget program
\nonly for the period up to November when a new government is
\nscheduled to be formed.<\/p>\n
\"CGI creditors should convene a meeting with the new
\ngovernment sometime in November to discuss budget spending
\nprograms,\" he said.<\/p>\n
National Development Planning Board (Bappenas) chairman
\nBoediono said on Saturday that Indonesia needed between US$5.5
\nbillion and $6 billion in new foreign loans to plug the 1999\/2000
\nstate budget deficit.<\/p>\n
He said part of the needed loans was secured after the
\ncountry's largest donors, including Japan and the World Bank,
\nconfirmed their financial support earlier this year.<\/p>\n
\"The total of overseas loans we need is between $5.5 billion
\nand $6 billion for the 1999\/2000 fiscal year. But some of the
\nneeded loan was pledged,\" Boediono said.<\/p>\n
Boediono added the remaining budget shortfall was expected to
\nbe covered by commitments from donors at the upcoming
\nConsultative Group on Indonesia (CGI) meeting in Paris on July 27
\nand July 28.<\/p>\n
At the meeting with World Bank representatives on Monday, Kwik
\nalso called on all other major parties to start thinking about
\nways of gradually decreasing new foreign loans.<\/p>\n
\"The foreign debt burden should be reduced to prevent a debt
\ntrap for the next generation,\" Kwik said.<\/p>\n
\"We should sacrifice and not hesitate to cut down on
\ndevelopment spending even though such a move will affect economic
\ngrowth,\" he added.<\/p>\n
Indonesia, he added, did not ask for debt forgiveness from the
\nWorld Bank, the chair of CGI and other creditors.<\/p>\n
\"We only ask them for advice on how we can gradually reduce
\nour debts in the future.\"<\/p>\n
Kwik criticized the perception among international creditors
\nand the Indonesian government which associated the approval of
\nbig loans as a reflection of high credibility.<\/p>\n
\"No wonder in the past each time Indonesia got new big loan
\ncommitments from CGI creditors the government would proudly
\nannounce the new pledges as a great achievement,\" Kwik said.<\/p>\n
Sayuti Hasibuan from the United Development Party (PPP) said
\nhis party also agreed to continued CGI loan disbursements to plug
\nthe current budget hole.<\/p>\n
\"The loan disbursement schedules cannot be stopped as they are
\nneeded to maintain the welfare of Indonesians,\" Sayuti said.<\/p>\n
However, he suggested that creditors forgive at least 30
\npercent of Indonesia's official debts which are now estimated at
\nUS$70 billion.<\/p>\n
He argued a good portion of the huge foreign debt overhang
\nincurred without the people's consent.<\/p>\n
\"Besides, a large sum of foreign debts was wasted so far of
\nwhich creditors and the Indonesian government have to be held
\nresponsible,\" Sayuti said.<\/p>\n
He also called for prudence for new loans to ensure that funds
\nbe used optimally for the people's benefit.<\/p>\n
Eki Sachruddin from the ruling Golkar party said his party
\nshared the views of the three other major political parties,
\nnamely, PDI Perjuangan, PPP and the National Awakening Party
\n(PKB) regarding the continuation of foreign loan disbursements.<\/p>\n
\"It is difficult to raise domestic capital to fuel Indonesia's
\neconomic recovery. Given our economic recession, we sorely need
\nforeign loan financing,\" Eki added.<\/p>\n
Eki said after the meeting that all parties except PAN
\nsignaled agreement on the CGI loan disbursement.<\/p>\n
Bara Hasibuan from PAN confirmed after the meeting that his
\nparty did not see any reason at all for the present government,
\nwhich was a transitional one, to seek new loans to finance the
\ncurrent state budget.<\/p>\n
\"Our calculation shows the current state budget no longer
\nneeds additional foreign loans because the deficit was already
\ncovered,\" Bara added.<\/p>\n
\"New loan disbursements can wait.\"<\/p>\n
Bara said his party also did not believe the Habibie
\nadministration, notoriously known for its rampant corrupt
\npractices, could be entrusted with new foreign loans.<\/p>\n
\"The flagrant misuse of social safety net programs is a
\nglaring example of how corrupt the present administration is,\"
\nBara pointed out.<\/p>\n
\"PAN suggested the upcoming CGI meeting only evaluate the past
\nmisuse of CGI funds and devise ways of preventing further abuse,\"
\nhe said.<\/p>\n
Fajrul Falaakh, a representative from PKB, was not available
\nfor comment after the meeting.(udi)<\/p>",
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