Economists credit govt policy for higher foreign aid<\/p>\n
JAKARTA (JP): Economists said overseas donors' decision to
\nincrease aid to Indonesia reflected international confidence in
\nIndonesia's economy.<\/p>\n
The head of the National Private Banks Association supervisory
\nboard, I Nyoman Moena, said Indonesia had convinced donor
\ncountries and organizations that it could manage the loans
\nprudently.<\/p>\n
\"The use of the money will increase the capacity of the
\neconomy in the long run and allow Indonesia to pay off its debts
\non time,\" Moena said.<\/p>\n
Moena said the fact that Indonesia had not rescheduled its
\ndebt repayment program in 20 years was influential in convincing
\ndonors to maintain the level of their aid commitments this year.<\/p>\n
The governments and multilateral financial institutions that
\nmake up the Consultative Group on Indonesia (CGI) committed
\nUS$5.3 billion in financial aid to Indonesia for the 1997\/1998
\nfiscal year after a two-day meeting in Tokyo which ended
\nThursday.<\/p>\n
The fresh loan commitment is slightly more than the $5.26
\nbillion pledged by Indonesia's creditor group in 1996\/1997.<\/p>\n
Nathan Associates economist Ted James was quoted by AFP as
\nsaying the increasing aid commitments to Indonesia by overseas
\ndonors was a stamp of approval for the country's sound economic
\npolicies.<\/p>\n
\"We expected the CGI to come up with about the same amount of
\naid as last year given Indonesia's strong economic policies and
\noverall good policymaking,\" James said.<\/p>\n
The bulk of the aid came from Japan at $1.87 billion, the
\nWorld Bank at $1.5 billion, with the Asian Development Bank
\npledging $1.2 billion.<\/p>\n
The CGI loans came from 18 countries and 11 multilateral
\nlending agencies and are expected to be used largely for
\ninfrastructure, human resources and poverty alleviation programs.<\/p>\n
The aid group was formed in 1990 to replace the Dutch-chaired
\nInter-Governmental Group on Indonesia which Jakarta disbanded
\nclaiming The Hague was using it to pressure Indonesia.<\/p>\n
James said Japan's reduction in aid, down from $1.92 billion
\nin 1996, was \"not surprising\" given its budget cuts, adding that
\nit was not because of concerns over Indonesia's national car
\npolicy which Japan disputes.<\/p>\n
Japan, along with the United States and the European Union,
\nhas complained to the World Trade Organization over Indonesia's
\nnational car program, which it says flouts international trade
\nrules.<\/p>\n
The so-called national car policy grants exclusive import and
\nluxury tax breaks to PT Timor Putra Nasional, controlled by
\nPresident Soeharto's youngest son Hutomo Mandala Putra, to make a
\nnational car called Timor.<\/p>\n
The Ekonit research group's Dendy Kurniawan warned that Japan
\nwould continue to reduce its aid to Indonesia as domestic
\nsentiment demanded the Japanese government reduce foreign
\nassistance.<\/p>\n
Dendy said Indonesia should reduce its dependence on foreign
\nassistance by continuing to improve domestic capacity to finance
\nthe country's development needs.<\/p>\n
Moena said the government should continue to repay its foreign
\ndebts with high interest rates ahead of schedule to reduce the
\nburden of servicing debts in the future.<\/p>\n
He said the government's prepayment of foreign high interest
\ndebts had bolstered its credibility.<\/p>\n
As of last fiscal year, the government had repaid $2.6 billion
\nin foreign debt ahead of schedule since the 1994\/1995 fiscal
\nyear, saving the government $1.45 billion in interest payments.<\/p>\n
The minister of finance, Mar'ie Muhammad, said yesterday that
\nthe government would repay another $1 billion this fiscal year.<\/p>\n
But Mar'ie did not specify where the government would source
\nthe funds to be used for early debt repayment this year.<\/p>\n
So far the government has used its budget surplus and the
\nproceeds from selling state-owned companies. (rid)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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