Govt urged to seek lenient terms from CGI<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Less than a week before the annual meeting of the Consultative
\nGroup on Indonesia (CGI) takes place, the government is being
\nurged to be tougher on the group and refrain from bowing to its
\nburdensome loan requirements.<\/p>\n
As every cent of the loans will be repaid, Indonesia has to be
\nable to stand as an equal partner, and thus deserves a stronger
\nbargaining position with the country's largest lenders grouping,
\nsaid economists Rizal Ramli and Revrisond Baswir.<\/p>\n
Both agreed that Indonesia had always been on the weaker side
\nagainst the foreign lenders and was helpless in receiving the
\ntough demands attached to the loans.<\/p>\n
"In my opinion, there has to be a reform or a repositioning in
\nthe government's relationship with the CGI," Rizal told a seminar
\nhere on Thursday, held ahead of the CGI's two-day convention. The
\nconvention, to start on Dec. 10, will determine the group's loan
\ncommitments to Indonesia to help it cover the 2004 state budget
\ndeficit.<\/p>\n
So far, he continued, CGI had been acting as a sort of cartel
\nin which Indonesia, with its weak bargaining position, had barely
\na say in the loan negotiating process.<\/p>\n
"They have become so because the government did not stand up
\nand fight in seeking softer terms and conditions," Rizal said,
\nadding that as a result, Indonesia, for example, had to rush to
\ndeliberate several laws that should not have been prioritized.<\/p>\n
The former finance minister did not specify which laws he was
\nreferring to.<\/p>\n
The CGI loan is often attached to the implementation of a
\nnumber of reform programs.<\/p>\n
Revrisond, the outspoken economist from University of Gadjah
\nMada, even said the government should review the role of CGI to
\ndetermine whether its presence was still beneficial to the
\ncountry.<\/p>\n
Not only does the presence of CGI mean an increase in the
\ncountry's debt burden, its effectiveness has also been questioned
\nin light of various reports suggesting massive embezzlement in
\nCGI's loans, thus reducing their beneficial impact.<\/p>\n
And the fact that the donors have continued to disburse the
\nloans, despite such a report, should be evidence enough that the
\nCGI has been taking advantage of Indonesia, he said.<\/p>\n
If these issues were not addressed, Revrisond said, "I suggest
\nCGI be dissolved. We can seek bilateral commitments as a
\nreplacement."<\/p>\n
The two economists' concerns over the effectiveness of the CGI
\nwere the latest such remarks to come to the surface. Similar
\ncalls had earlier been on the rise, following reports of leakage
\nin the CGI's loans.<\/p>\n
The National Development Planning Board (Bappenas) has said
\nthat the loans were prone to corruption by officials.<\/p>\n
It estimated that at least 20 percent of the CGI loans
\nintended to finance various infrastructure projects each year,
\nhave been abused during the implementation stage of the projects.
\nThese abuses occurred through corruption, by the marking up of
\nproject costs.<\/p>\n
Unconfirmed reports previously suggested that around 30
\npercent of international loans fell victim to corruption during
\nthe 32-year rule of then-president Soeharto.<\/p>\n
The CGI, which groups 30 bilateral and multilateral donors,
\npledged early this year some US$2.7 billion in loans to help
\nfinance the 2003 state budget deficit.<\/p>\n
The funding from the CGI, for next year's budget deficit
\nfinancing, remains unclear, but the 2004 state budget is targeted
\nto receive some Rp 28.2 trillion in foreign loans.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-urged-to-seek-lenient-terms-from-cgi-1447893297",
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"sponsor": "Okusi Associates",
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