RI seeks debt deal from Paris Club<\/p>\n
JAKARTA (JP): Indonesia needs a further debt-rescheduling
\nfacility from the Paris Club of creditor nations to lift pressure
\nfrom foreign debt payments in the 2002 state budget, new
\nCoordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti
\nsaid on Friday.<\/p>\n
Dorodjatun said Indonesia's budget next year would face
\ndifficulties without another Paris Club debt rescheduling deal.<\/p>\n
\"I always thought that the first and second Paris Club deals
\nwould be enough,\" he said.<\/p>\n
\"But I've noticed that it isn't that easy, so we are forced to
\nconsider doing further negotiations with the Paris Club,\" he said
\nwithout elaborating.<\/p>\n
Last year, the Paris Club of 19 government creditors agreed to
\nreschedule US$5.8 billion of Indonesia's debt due to its maturity
\nbetween April 2000 and March 2002.<\/p>\n
Of the $5.8 billion in debts, $2.21 billion matured last year,
\n$2.8 billion this year and another $717 million will mature in
\nthe first quarter of 2002.<\/p>\n
In 1999, Indonesia inked its first Paris Club debt
\nrescheduling deal worth $4.2 billion, which was due to mature by
\nMarch 2000.<\/p>\n
The Paris Club deals have allowed the government to allocate
\nmore funds to development spending and social needs.<\/p>\n
The deals have also helped boost foreign creditors' confidence
\nwhile releasing pressure on the rupiah.<\/p>\n
However, a third deal will likely depend on how Indonesia
\nconforms with the Paris Club's requirements for the current
\ncondition: meeting economic reform targets set under the
\nInternational Monetary Fund (IMF) program.<\/p>\n
Indonesia's foot-dragging on some of these reform targets last
\nyear prompted the IMF to suspend a $400 million loan tranche.<\/p>\n
Consequently, the move annulled the rescheduling deal of $2.8
\nbillion for this year until after the IMF resumes its lending.<\/p>\n
The government is struggling to secure a Letter of Intent
\n(LoI) from the IMF to unlock the fund's loans.<\/p>\n
That would have to come prior to a September meeting of the
\nclub, which will be held to review the remaining debts until
\n2002.<\/p>\n
Indonesia hopes to secure the LoI by the end of August or
\nearly September at the latest.<\/p>\n
The Paris Club meeting is slated for September 10, said
\nDorodjatun.<\/p>\n
He said he expected an IMF team to arrive in Jakarta after
\nIndonesia's Independence Day on Aug. 17.<\/p>\n
A senior government official said earlier that the IMF's
\nplanned visit was to meet Indonesia's new government,
\nparticularly its economics team.<\/p>\n
Dorodjatun also added that he expected continued loan support
\nfrom the Consultative Group on Indonesia (CGI) to help finance
\ndevelopment spending in the 2002 state budget.<\/p>\n
To this end, he said, the government must push ahead with
\ndrafting the 2002 state budget.<\/p>\n
\"The budget must be clean and convincing when we present it to
\nthe CGI,\" he said. The group will convene again in October.<\/p>\n
Economists, however, have urged the government to cut its
\nreliance on foreign debts, due to its pressure on the state
\nbudget.<\/p>\n
The Brussels-based International Crisis Group (ICG) puts the
\nIndonesian government's foreign debts, including those of state
\nfirms, at $84 billion.<\/p>\n
In total, Indonesia's foreign and domestic debts amount to
\nsome $154 billion, which is equal to the country's gross domestic
\nproduct, according to the ICG.<\/p>\n
Dorodjatun said on Thursday that tackling Indonesia's massive
\nforeign debts was among his key priorities.<\/p>\n
\"Our debt situation is the worst ever in the history of this
\nrepublic,\" Dorodjatun said.<\/p>\n
Earlier, American expert on Indonesia Jeffrey A. Winters said
\nthis year's spending on foreign debt servicing was six times
\nhigher than that for education, social and health care needs.<\/p>\n
\"It is the poor that suffers the most from this situation,\" he
\nsaid.<\/p>\n
Moreover, Winters said, Indonesia continued paying what he
\ncalled illegitimate foreign debts totaling some $30 billion.<\/p>\n
He said the $30 billion made up 30 percent of the foreign
\ndebts that fell victim to corruption under the regime of former
\npresident Soeharto.<\/p>\n
He suggested that Indonesia ask for a suspension of payments
\non the illegitimate foreign debts, saying it was unfair creditors
\ndemanded their loans be paid back in full with interest.<\/p>\n
He said Indonesia was in a strong legal position to ask
\ncreditors for a debt moratorium before an international court.<\/p>\n
World Bank officials have privately acknowledged the loan
\nabuse in the past.<\/p>\n
On Tuesday, Australian Foreign Minister Alexander Downer said
\nhis country and the World Bank would investigate the loan abuse
\nunder a joint study to ease Indonesia's debt payments.<\/p>\n
\"We and the World Bank are now going to put together a joint
\nstudy on the structure of that debt and whether anything can be
\ndone about it internationally,\" he said.<\/p>\n
He made no comments on the possibility of a debt moratorium or
\nhaircut on Indonesia's alleged illegitimate debts.<\/p>\n
New Minister of National Development Planning Kwik Kian Gie
\nsaid it was unlikely that Indonesia would ask for a debt haircut.<\/p>\n
\"I've tried it before, and they (creditors) told me not to
\neven mention it (a debt haircut). Debt rescheduling is enough,\"
\nhe said.<\/p>\n
Pushing ahead with demands for a debt haircut risked
\nisolation from international creditors, he warned.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-seeks-debt-deal-from-paris-club-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}