RI, Germany agree US$29.25 million debt swap deal
\nJP\/13\/german<\/p>\n
Tony Hotland
\nJakarta<\/p>\n
Acknowledging the success of two earlier debt swap deals, the
\nGermany government has announced that it will enter into a third
\ndeal with Indonesia worth 25 million euros (US$29.25 million) for
\nenvironmental projects.<\/p>\n
Germany's deputy minister for economic cooperation and
\ndevelopment, Uschi Eid, said that the German government was
\npleased with the ongoing projects being implemented under the
\nfirst two debt swap deals.<\/p>\n
"Our government is also interested in stronger and more
\neffective cooperation to protect the natural resources of
\nIndonesia. That's why the third deal is dedicated to the
\nenvironmental field," she told a press conference here on Friday.<\/p>\n
Eid was on a five-day visit to Indonesia. She met with several
\nnon-governmental organizations (NGOs) and economic ministers, and
\nalso visited a number of Indonesian-German projects.<\/p>\n
The third deal has yet to be officially signed, but
\ndiscussions about what type of environmental projects will be
\ninvolved are currently underway with the Ministry of Forestry and
\nthe Office of the State Minister for the Environment.<\/p>\n
Debt swaps are usually carried out to reduce a country's debt
\nby requiring the debtor to spend a specified amount of the
\noriginal debt on financing certain programs that are of concern
\nto the donors. As a consequence, the borrowing country does not
\nhave to repay the amount of the debt that is used for these
\nprograms.<\/p>\n
Under the Indonesian-German debt swap scheme, Germany will
\nwrite off a certain amount of debt after Indonesia spends 50
\npercent of the renounced amount in rupiah on projects that have
\nbeen agreed by both governments.<\/p>\n
Indonesia owes up to 1 billion euros to Germany.<\/p>\n
The two countries signed the first debt swap deal worth 25.6
\nmillion euros in December 2000 for education projects. As a
\nconsequence, Indonesia must spend 12.8 million euros to build and
\nequip 511 learning resource centers in 17 provinces to enhance
\nthe quality of teacher training in the basic sciences. These
\nprojects are nearing completion.<\/p>\n
The second deal, involving 23 million euros, was arranged in
\nOctober 2002. The two governments agreed to dedicate the deal to
\nimproving primary and secondary education in eastern Indonesia by
\nbuilding 100 new schools. The building of the schools is
\ncurrently underway and is expected to be completed by 2006.
\nIndonesia is obliged to invest 11.5 million euros.<\/p>\n
No debt from the first two deals has been written off yet.<\/p>\n
The implementation of all the projects under the debt swap
\ndeals is monitored German development bank KfW's branch in
\nJakarta.<\/p>\n
Also on Friday, KfW signed two agreements with the Ministry of
\nFinance. The first agreement involves a disbursement of nine
\nmillion euros in a soft loan and one million euros in grant aid
\nfor the purpose of improving industrial pollution control.<\/p>\n
The second one deals with the provision of a five million euro
\ngrant by KfW to support nationwide campaigns, training, and
\ngrassroots work in preventing the spread of HIV\/AIDS.<\/p>",
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