Government drafting law on foreign debt<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
To help avoid another financial crisis in the future, the
\ngovernment is finalizing a draft law on foreign debt, which will
\nserve as a legal basis and provide a clearer mechanism on how to
\nget and make use of foreign borrowings.<\/p>\n
Minister of Finance Boediono expected the law to function not
\nonly as an early warning mechanism for the government, but also
\nas prudential guidelines for creditors in providing loans.<\/p>\n
"It's still being drafted. And I'm not sure when it would be
\npresented before the House of Representatives for deliberation,"
\nBoediono told reporters after attending a plenary session with
\nthe House on the 2003 state budget Wednesday.<\/p>\n
Indonesia has been seeking ways not to emulate the mistakes in
\nthe past when an unchecked government piled on foreign debt,
\nleaving a huge burden for the present government to tackle. There
\nhas also been accusations that a large chunk of the debt has been
\nmisused by the previous regime under former president Soeharto.<\/p>\n
And since the crisis struck in 1997-1998, which saw the local
\ncurrency drastically lose its value to the dollar, efforts to
\nrepay those loans have been tougher than ever.<\/p>\n
Servicing the annual debt interest alone has proved hard for
\nthe government. This year, close to Rp 30 trillion (US$3.37
\nbillion) or around 1.7 percent of the gross domestic product has
\nbeen allocated to service the debt.<\/p>\n
To help ease the burden on the state budget, the government
\nhas had to seek a rescheduling facility from the creditor group
\nof nations under the Paris Club.<\/p>\n
The upcoming law is expected to help the government make its
\nfinancial arrangements.<\/p>\n
Details remain sketchy, but an official at the Office of the
\nCoordinating Minister for Economy said the law was aimed at
\nenabling the government to better manage foreign borrowings.<\/p>\n
"The spirit in general is to make a clearer decision-making
\nmechanism in obtaining foreign loans. That's important for the
\npublic as it is them who will be burdened (by it)," Mahendra
\nSiregar told The Jakarta Post.<\/p>\n
Although he admitted to have little knowledge of it as he was
\nnot part of the team drafting the bill, Mahendra believed that
\nthe law would only be applied to the government's foreign debts.<\/p>\n
"My understanding is that foreign loans made by private
\nbusinesses will not be the subject of the law.<\/p>\n
"After all, unlike the government's debts that would leave the
\npeople to bear the brunt, the debt burden of the private sector
\nshould be settled by themselves. Not to mention that debts made
\nby the private companies have their own market mechanisms," he
\nadded.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-drafting-law-on-foreign-debt-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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