Borrow with caution

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