Government aims to limit new loans from CGI<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government still needs loans from the Consultative Group on
\nIndonesia (CGI) to help plug next year's state budget deficit,
\nbut has vowed to keep them in line with the country's commitment
\nto reduce dependency on foreign debts, a senior minister said.<\/p>\n
State Minister for National Development Planning Sri Mulyani
\nIndrawati asserted that the new loans would not exceed last
\nyear's US$3.4 billion, and is also expected to cover only half of
\nthe 2005 state budget deficit.<\/p>\n
\"The figure is the upper benchmark for next year's loans from
\nCGI,\" she told reporters on Wednesday.<\/p>\n
The CGI, a group of 30 bilateral and multilateral donors
\nincluding the World Bank and the Asian Development Bank, is
\nexpected to hold its meeting in the second week of January next
\nyear.<\/p>\n
Last year CGI pledged $2.7 billion in loans and grants for the
\n2004 state budget, plus another $700 million in grants and
\ntechnical assistance for the regions and non-governmental
\norganizations.<\/p>\n
The government plans to revise next year's state budget
\ndeficit figure from 0.8 percent to 1 percent of the gross
\ndomestic product (GDP), on the back of its plans to boost
\ninfrastructure development next year, among other things.<\/p>\n
Mulyani explained that there are two issues that have created
\na dilemma for the government in accepting new loans from the CGI.<\/p>\n
On the one hand, she said, donors have indicated that they are
\nactually willing to give more funds to Indonesia next year, while
\nthe government also needs the funds to spur economic growth.<\/p>\n
\"But on the other hand, the government wants to stick to its
\ncommitment to reducing foreign debts and the debt ratio,\" she
\nsaid. \"We will therefore seek an in-between solution.\"<\/p>\n
The World Bank recently said that it has put Indonesia in its
\n\"high case scenario\" country list, meaning the country would be
\neligible to receive annual loans of up to $1 billion, from the
\nusual $400 million.<\/p>\n
The government has planned to reduce the debt ratio to 54.9
\npercent of GDP next year, down from 60.1 percent in 2004.<\/p>\n
Mulyani previously said that the government would also draft
\nits own agenda and suggest it to the CGI, rather than taking for
\ngranted what the group was willing to commit.<\/p>\n
Local economists have long urged the government to reduce
\nIndonesia's dependency on foreign debts.<\/p>\n
They argued that due to rampant corruption the funds were not
\nused for public welfare -- such as for education and health care
\n-- but instead had become a burdensome debt trap.<\/p>\n
Global graft watchdog Transparency International this year
\nranked Indonesia as the fifth most corrupt nation, while the
\nUnited Nations has put the country at the low rank of 111 on its
\nhuman development index list.<\/p>\n
Commenting on the government's plan to take new CGI loans,
\neconomist Bustanul Arifin said it was reasonable, as long as it
\nwas manageable and the government really needed it in the face of
\nscarce domestic funding for the state budget.<\/p>\n
\"The government, however, has to ensure that the new debts are
\nactually used for development, and seek debt swap schemes from
\nthe donors,\" he said. \"Otherwise, it could face public
\ndissatisfaction, and we will not progress in financing our debts
\neither.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-aims-to-limit-new-loans-from-cgi-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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