Antiterror support

Antiterror support
not linked
with Paris Club

Berni K. Moestafa
The Jakarta Post
Jakarta

Indonesia could count on U.S. support during debt rescheduling
talks with the Paris Club according to one senior U.S. official,
who also warned that the meeting should not be linked with
Indonesia's much criticized role in combating terrorism.

The United States executive director to the International
Monetary Fund (IMF), Randy Quarles, said on Wednesday that his
government would be supportive during the Paris Club meeting.

"I wouldn't draw a link necessarily between the two (issues),"
he said when asked whether Indonesia's allegedly slow
antiterrorism efforts would affect U.S. support during next
month's Paris Club meeting.

The government is seeking to reschedule some US$5.5 billion in
sovereign debt falling due this and next fiscal year to creditor
nations grouped in the Paris Club.

Rescheduling the debt is seen as crucial to keeping the state
budget deficit at the targeted level of Rp 42.13 trillion (about
$4.2 billion) this year.

But concern has surfaced that the government may not get the
club's full support when they meet for talks next month.

Indonesia has come under fire for not doing enough to crack
down against alleged terrorists at home amid suspicion of an
Indonesia-based terrorist network planning to wreck havoc in the
region.

"Indonesia is a long-standing friend and ally of the United
States, so that would always inform our attitude towards
Indonesia in the Paris Club," Quarles said, describing the
government's antiterrorism policy as welcome.

Quarles also hailed the House of Representatives' approval of
the money-laundering bill last Thursday, which he said would not
only serve to further the war against terrorism, but was also
vital to improving macroeconomic stability.

The US government and the IMF, he said, believed that efforts
to counter money-laundering and terrorist financing were of
"significant macroeconomic relevance".

He added that Indonesia's performance in these areas would
become part of the IMF's review policy in the future.

But Quarles played down suggestions that the US government was
mixing its foreign policy with that of the IMF's.

"It's clearly a desire of secretary O'Neill (U.S. Treasury
Secretary Paul O'Neill) not to use the international financial
institution for political purposes, and not to attempt to further
U.S purely political interests through policies in the
international financial institution," he explained.

Policymakers had earlier raised hopes of a favorable debt
rescheduling deal should Indonesia prove to the U.S. its
commitment to combating terrorism.

The Paris Club allowed Pakistan last year to reschedule two-
thirds of its debt over spans of more than 38 years and 23 years
under what are called the Islamabad Terms.

Many believe the deal was made possible as Pakistan is one of
the U.S.'s most crucial allies in its war against terrorists in
Afghanistan.

Quarles did not specify the purpose of his visit to Jakarta,
other than to say it was to assess Indonesia's economic situation
at first hand.

But his arrival followed just after Minister of Finance
Boediono flew to Washington last week to explain more or less the
same thing.

Quarles said he had met Boediono, State Minister of State
Enterprises Laksamana Sukardi, and Indonesian Bank Restructuring
Agency (IBRA) chairman I Putu Gede Ary Suta.

So far, he said, Indonesia appeared to be heading in the right
direction in terms of macroeconomic stability and its slow yet
ongoing privatization efforts.

Quarles also expected to have an IMF review mission arriving
in Jakarta soon to pave the way for the release of another loan
tranche.

That would mark the fifth signing of a government Letter of
Intent (LoI) to the fund, after last year's deal secured the
disbursement of a $360 million loan tranche.