Govt continues to study moratorium conditions, details<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government is still studying conditions and details of the
\nlatest debt moratorium offer from the Paris Club of creditor
\nnations, before making its final decision on the offer.<\/p>\n
"There is a need for further negotiation before we accept the
\noffer. Officially, we have yet to decide our position," Vice
\nPresident Jusuf Kalla told a press briefing on Thursday.<\/p>\n
He added that the moratorium offer would help the government
\nkeep this year's budget deficit to below 1 percent of gross
\ndomestic product (GDP).<\/p>\n
Indonesia is facing the likelihood of a budget deficit of
\nabout 1.3 percent of GDP this year, due mainly to the need to
\nfinance reconstruction of tsunami-devastated Nanggroe Aceh
\nDarussalam and parts of North Sumatra.<\/p>\n
Kalla said that if the government accepts the moratorium on
\nbeneficial terms and conditions, then the country would be able
\nto allocate sufficient funds for Aceh reconstruction as there
\nwould be additional funds in the state budget.<\/p>\n
"The moratorium is being given to ease the burden on our state
\nbudget for rebuilding Aceh. These additional funds -- resulting
\nfrom the moratorium -- should be used in accordance with that
\npurpose," he said.<\/p>\n
The government said it would allocate some Rp 45 trillion
\n(US$4.82 billion) for the reconstruction of Aceh over the next
\nfive years, with some 50 percent of funds going to infrastructure
\nprojects, 20 percent to health and education programs, and the
\nremaining 30 percent for other purposes.<\/p>\n
Following the three-month debt suspension worth US$350 million
\nin the immediate wake of the tsunami, the Paris Club last week
\nagreed to extend the moratorium until Dec. 31 -- worth $2.6
\nbillion -- to help Indonesia rebuild Aceh. In total, Indonesia
\nowes Paris Club nations about $48 billion.<\/p>\n
The moratorium offer includes the suspension of payments of
\ndebt principal and interest for a certain period of time.<\/p>\n
Earlier on Monday, State Minister of National Development
\nPlanning Sri Mulyani Indrawati said that the government would
\nlikely take up the offer as it would not be compelled to enter
\nanother program with the International Monetary Fund (IMF), or to
\napply "comparable treatment" towards private sector debts.<\/p>\n
Indonesia has objected to linking the debt moratorium with
\nhaving to undergo another program with the IMF, due in part to
\npublic opposition, with many believing that the IMF's previous
\neconomic recipes had failed to nurture the nation's economy and
\nhad in fact slowed its recovery. Indonesia's financial
\ninstitutions virtually collapsed during the Asian financial
\ncrisis of the late 1990s.<\/p>\n
Indonesia also rejected the so-called "comparable treatment"
\nscheme, which would have meant that creditors would have had to
\nsuspend private sector debt repayments as well, which would have
\nresulted in a downgrade of their credit portfolio's and caused a
\ndowngrade in Indonesia's overall credit rating, which actually
\nimproved last year.<\/p>\n
To obtain the budgetary benefits from the debt moratorium,
\nhowever, the government must first negotiate with several Paris
\nClub members who are still reluctant to suspend the payment of
\ntheir debts, or who have not yet set out any terms for the
\nmoratorium.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-continues-to-study-moratorium-conditions-details-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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