RI will not seek debt relief: Kwik<\/p>\n
JAKARTA (JP): Coordinating Minister for Economy, Finance and
\nIndustry Kwik Kian Gie reiterated on Wednesday that the
\ngovernment would not seek debt relief from its international
\nlenders at an upcoming donors meeting in February.<\/p>\n
Kwik said that seeking a debt haircut would cause Indonesia to
\nbecome isolated from the world and cut off the country from badly
\nneeded external financing sources.<\/p>\n
\"A haircut would only be possible if all the people of
\nIndonesia wanted to live miserably,\" he told reporters following
\na meeting of representatives of the Consultative Group on
\nIndonesia (CGI), the country's major donor grouping.<\/p>\n
\"The scope of the misery could not be estimated. Once we ask
\nfor a haircut, then at the same time Indonesia would be isolated
\nfrom the world and the inflow of funds would stop,\" Kwik said.<\/p>\n
\"It wouldn't be the end of the world but Indonesia would
\nsuffer deep misery,\" he added.<\/p>\n
Several leading non-governmental organizations have stepped up
\npressure on the government to seek debt relief on the grounds
\nthat some 30 percent of sovereign loans had been pillaged by the
\nprevious administration of former president Soeharto.<\/p>\n
Indonesia's sovereign loans are estimated to have reached some
\nUS$70 billion.<\/p>\n
Kwik said the new government of President Abdurrahman Wahid
\nwas determined to be effective in the utilization of foreign
\nloans and to prevent corruption.<\/p>\n
He said that this issue would be at the top of the agenda at
\nthe Feb. 1-2 CGI meeting which will be held in Jakarta for the
\nfirst time.<\/p>\n
Asked to disclose the amount of foreign loans the government
\nwould seek from CGI, Kwik said that it was still being
\ncalculated.<\/p>\n
Kwik reiterated, however, that while the government was
\ndetermined to lower the country's dependence on foreign loans, it
\ncould not be done immediately.<\/p>\n
\"In the short term, it's not possible for Indonesia to reduce
\nits debt as we need funds to stimulate the economy and to drive
\nthe recovery,\" he said.<\/p>\n
Kwik said that the current government had changed the attitude
\ntoward foreign loans.<\/p>\n
\"Previous governments were happy if at every CGI meeting the
\ncountry could have larger amounts of loans. But the new
\ngovernment will be happy to get a smaller amount of loans at the
\nupcoming CGI meeting,\" he said.<\/p>\n
Kwik said that the external financing needs of the 2000 budget
\ncould be fulfilled by the three traditional lenders which
\nincluded the World Bank, the Asian Development Bank (ADB) and
\nJapan.<\/p>\n
\"Given the budget outlook, we will still need significant
\nbudget support for the coming fiscal year,\" Kwik said, adding
\nthat much of this could be financed by \"commitments already
\nmade.\"<\/p>\n
\"While there is likely to be a small residual gap, I am
\npleased to note that initial contacts suggest this will be
\ncovered by the World Bank, the Asian Development Bank and Japan,\"
\nhe said.<\/p>\n
He said that the budget deficit next year was estimated at 5
\npercent of gross domestic product.<\/p>\n
Kwik also said that in a bid to reduce dependence on foreign
\nloans, the government had canceled some $1 billion in loans
\nalready committed by the World Bank and the Asian Development
\nBank for the current budget.<\/p>\n
He added that the new government was determined to lift the
\ncountry out of its economic crisis by pressing ahead with
\neconomic reform programs.<\/p>\n
\"Developing a sound economic program that will place Indonesia
\nwell on the road to recovery is perhaps the greatest initial test
\nfor the new government,\" Kwik said in a statement delivered at
\nthe CGI representatives meeting, which was held at the World
\nBank's Jakarta office.<\/p>\n
Kwik reiterated that the government and the International
\nMonetary Fund (IMF) were designing a new three-year economic
\nprogram to be financed by the IMF.<\/p>\n
Kwik said that in the area of banking reform, the government
\nwas committed to completing the reorganization and
\nrecapitalization of all of state banks by June 2000.<\/p>\n
\"At the same time, we plan to have complete the reorganization
\nand consolidation of nationalized banks and closed down banks by
\nSeptember next year,\" he said.<\/p>\n
\"Following the reorganization and recapitalization, we will
\nmove forward with a vigorous program to privatize the banking
\nsystem,\" he said.<\/p>\n
He said that the privatization process would begin with an
\ninitial public offering of the nationalized Bank BCA by February
\n2000.<\/p>\n
\"We will then proceed with majority divestment of key state
\nbanks and other nationalized banks,\" he added.<\/p>\n
Kwik also stressed the important role of the Indonesian Bank
\nRestructuring Agency (IBRA) in raising funding to help finance
\nthe country's bank recapitalization program.<\/p>\n
He reiterated that the bank recapitalization program next year
\nwould require gross interest payments amounting to some 4 percent
\nof gross domestic product, absorbing more than 10 percent of the
\ngovernment's 2000 state budget. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-will-not-seek-debt-relief-kwik-1447893297",
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