Borrow with caution

The new loan recently approved by the Consultative Group on Indonesia (CGI) is the 30th since the aid consortium -- formerly known as the Inter-Governmental Group on Indonesia (IGGI) -- began giving out loans to Indonesia. There is no need to mention the amount involved; the important thing to note is the fact that our government loans have been constantly increasing.

Available data show that our foreign loans now amount to more than US$100 billion, almost $70 billion of which are government loans. This increase in our indebtedness is a consequence of the balanced budget principle which the New Order government follows, under which revenue for the development budget is provided by loans.

It seems to be prudent for us at this point to take heed of the views that have been offered by international observers and institutions with regard to our position. Our own senior economist, Sumitro Djojohadikusumo, also has frequently warned the government to exert caution with regard to loans. Our increasing debts should no longer be viewed merely as proof of foreign trust, but also as a burden that contributes to our growing current account deficit. This is a condition we should watch since it not only affects our debt service ratio but could also provide game for speculators.

-- Bisnis Indonesia, Jakarta