Japan to support RI at Paris Club<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Japan, Indonesia's single largest bilateral creditor, will
\nlend its support during debt rescheduling talks with the Paris
\nClub next week -- but only if Jakarta pushes ahead with its
\nreform program, a senior Japanese official said on Tuesday.<\/p>\n
Indonesia hopes to secure the re-scheduling of some US$5.5
\nbillion in principle and interest payments due to mature between
\nApril 2002 and December 2003 from the Paris Club meeting on April
\n11.<\/p>\n
\"With Indonesia's reform efforts as a prerequisite, Japan will
\nsupport Indonesia's debt rescheduling,\" an unidentified official
\nat Japan's finance ministry was quoted as saying by Reuters.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti and Finance Minister Boediono left for Japan on Monday to
\nseek support from Japan prior to the Paris Club meeting.<\/p>\n
They met with Japan's Foreign Minister Yoriko Kawaguchi and
\nVice Finance Minister for International Affairs Haruhiko Kuroda,
\naccording to the official who attended the meeting.<\/p>\n
He added that Indonesian officials knew that other creditors
\nhad taken tougher positions than Japan, and that efforts were
\nneeded to win them over.<\/p>\n
\"The Paris Club makes decisions by consensus, so we told them
\nto continue in their efforts,\" the official said.<\/p>\n
Concern of lax support has stemmed from Indonesia's slow
\nreform in a number of areas, and fueled by critics against its
\nlackluster efforts to crack down on alleged terrorist cells here.<\/p>\n
This situation drove Boediono to visit several creditor
\nnations last month, from where he returned with optimism.<\/p>\n
Last week, a senior U.S. official said that Indonesia's
\nreportedly slow anti-terror campaign would not be linked to the
\nParis Club, and that the U.S. government was supportive at the
\nmeeting.<\/p>\n
Visiting U.S. representative at the International Monetary
\nFund (IMF) Randy Quarles said that he was encouraged by the
\nprogress of Indonesia's economic reforms, although more needed to
\nbe done.<\/p>\n
Much of Indonesia's economic reform targets are contained
\nunder its Letter of Intent to the IMF.<\/p>\n
So far, the fund has had a positive view of Indonesia's reform
\nprogress, eclipsing worries on several missed targets.<\/p>\n
A spokesman at the Coordinating Ministry for the Economy,
\nMahendra Siregar, said that Dorodjatun and Boediono would likely
\nreturn on Tuesday or Thursday.<\/p>\n
Indonesia will meet for the third time since 1998 with its
\nofficial creditors under the Paris Club to defer payment on debts
\nfrom its chronic deficit state budget.<\/p>\n
The government hopes to secure around Rp 36.77 trillion (about
\n$US3.7 billion) from a combination of debt rescheduling and new
\nprogram loans, to make this the single largest contributor in
\nfilling out a Rp 42.13 trillion deficit in the 2002 budget.<\/p>\n
In the five years since the financial crisis struck, Indonesia
\nis still struggling to stay afloat as debt payment remains the
\nbiggest drag on its economy.<\/p>\n
This year, payment on foreign debt is estimated to hit Rp
\n72.93 trillion, while that on domestic debts is expected to reach
\nRp 63.45 trillion.<\/p>\n
In total, spending on debts may reach Rp 136.38 trillion, or
\nalmost 40 percent of the country's 2002 budget.<\/p>\n
Short on cash, the government sells off state assets and taps
\nnew loans to finance its budget deficit - moves that have earned
\nit widespread criticism among nationalists.<\/p>\n
This year, Indonesia will attempt to seek the rescheduling of
\ninterest payments that normally only highly indebted, poor
\ncountries are qualified for.<\/p>\n
Elsewhere, Bank Indonesia director for international affairs
\nVeronica Sulistyo said that Indonesia would seek to reschedule
\ndebts owed to private foreign lenders in line with demands from
\nthe Paris Club.<\/p>\n
\"Because of the equal treatment principle, Bank Indonesia has
\nto propose a rescheduling for the $300 million worth of
\nsyndicated loans failing due dates\" between April 2002-December
\n2003), she was quoted as saying by Reuters last week.<\/p>\n
The proposal, however, means that Indonesia risks downgrading
\nits country credit risk to selective default by Standard &
\nPoor's.<\/p>\n
At selective default, the cost of borrowing from foreign
\nfinancial institutions becomes costlier, further blocking much-
\nneeded foreign investment into the country.<\/p>\n
Mahendra said that it was too early to say whether Indonesia
\nwould propose rescheduling its debt to private lenders. \"This
\nwill dependent on negotiation with the Paris Club,\" he said.<\/p>\n
Government officials said earlier that Indonesia would
\nnegotiate with the Club not to reschedule its debts to private
\nlenders to avoid its country risk from dropping.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/japan-to-support-ri-at-paris-club-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}