Govt uncertain over Paris Club debt rescheduling<\/p>\n
JAKARTA (JP): The government is still uncertain as to whether
\nit will be able to obtain a vital rescheduling facility from the
\nParis Club of creditor nations of some US$2.7 billion in
\nsovereign debt maturing this year given its continuing dispute
\nwith the International Monetary Fund (IMF).<\/p>\n
Minister of Finance Prijadi Praptosuhardjo said on Wednesday
\nthat the Paris Club would only implement the debt rescheduling
\nagreed last year if the government managed to secure a new deal
\nwith the IMF.<\/p>\n
\"They (the creditors) are still waiting for a deal between the
\ngovernment and the IMF,\" Prijadi told reporters following a
\nmeeting with local representatives of the IMF and the World Bank
\nat the Ministry of Finance.<\/p>\n
\"The rescheduling facility is crucial (for the viability of
\nthe 2001 state budget),\" he added.<\/p>\n
The government reached an agreement with the Paris Club in
\nApril 2000 to reschedule some $5.8 billion in sovereign debt
\nmaturing between 2000 and 2001.<\/p>\n
But the IMF suspended its financial support to the country
\nlate last year and the Paris Club has also decided to delay the
\nrescheduling of debts maturing this year, though the rescheduling
\nof debts maturing last year has already been implemented.<\/p>\n
The rescheduling facility for the $2.7 billion debt is crucial
\nfor the 2001 state budget as the government has assumed that it
\nwould not have to repay such a huge sum this year.<\/p>\n
The state budget is already seriously threatened by the sharp
\nplunge in the rupiah and the rising interest rate, which may
\nwiden the budget deficit to a dangerous level of around 6 percent
\nof gross domestic product (GDP), compared to the initial target
\nof 3.7 percent of GDP.<\/p>\n
The government has revised the current state budget and has
\nproposed certain measures including raising fuel prices, tax
\nrevenues and cutting down spending to help contain the deficit at
\na safer level of around 3.8 percent of GDP. The revised budget
\nhas been proposed to the House of Representatives for
\ndeliberation.<\/p>\n
The government has obtained approval for the rescheduling
\nfacility from most members of the Paris Club through a bilateral
\nnegotiation process.<\/p>\n
Although the creditors agreed last year to reschedule
\nIndonesia's sovereign debt under the umbrella of the Paris Club,
\nthe government is also required to hold further bilateral talks
\nwith each of the creditor nations. If one of the creditors
\nsubsequently disapproves, the initial agreement might not be
\nimplemented.<\/p>\n
The government had earlier aimed to obtain approval from all
\nindividual members of the Paris Club by the end of this month.<\/p>\n
Prijadi admitted that some members had yet to provide their
\napproval, but declined to say which creditors due to the
\ncountry's continuing difficulties with the IMF.<\/p>\n
A government source had earlier said that out of the 17
\nmembers of the Paris Club, only Australia, Canada, and France
\nwith a total outstanding loan of around $100 million have yet to
\napprove.<\/p>\n
\"The implementation of the Paris Club rescheduling facility
\ndepends on the IMF,\" said Anggito Abimanyu, an expert at the
\nfinance ministry.<\/p>\n
But the agreement between the government and the IMF also
\nremains uncertain due to a dispute over the controversial
\namendment of the central bank law.<\/p>\n
The dispute centers on the government proposal to dismiss the
\nexisting Bank Indonesia board of governors once the House
\napproves the proposed bill on the amendment of the Bank Indonesia
\nlaw. The proposal is known as Chapter 75 of the bill.<\/p>\n
But a panel of experts, jointly set up by the government and
\nthe IMF to review the proposed amendment, had suggested the
\ngovernment scrap Chapter 75. The IMF has insisted the government
\nfollow the recommendations of the panel before a new deal can be
\nmade. The government has yet to decide on this issue. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-uncertain-over-paris-club-debt-rescheduling-1447893297",
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