Central government to guarantee provinces' debts
Central government to guarantee provinces' debts
JAKARTA (JP): Coordinating Minister for the Economy Rizal
Ramli said on Friday the central government would guarantee
foreign debts incurred by provincial administrations after the
autonomy law takes effect next year.
Rizal said a guarantee from the central government was
necessary to ease the concerns of foreign creditors about the
regions' ability to repay their debts.
He said foreign creditors attending the recent meeting of the
Consultative Group on Indonesia (CGI) in Japan, had raised
concerns over the ability of provincial administrations to repay
their foreign debts.
Rizal said the central government would be extra careful in
assessing the capability of a province in borrowing foreign
funds.
"Regions' foreign debts must not pass us unchecked," Rizal
said during a business luncheon hosted by the German-Indonesian
Business Association.
Visiting German Minister of Foreign Affairs Joschka Fischer
also attended the luncheon.
Rizal said the central government must avoid the mistakes of
other countries, which delegated provinces the authority to
oversee their own debts.
According to him, Brazil ran into problems during the 1980s
after its local administrations borrowed foreign funds without
proper supervision.
"The situation got out of control, and in the end it was the
central government that took over the debts," he said.
The government also gave its assurance last month that the
implementation of regional autonomy would not affect the
repayment of existing foreign debts.
Rizal also hinted the government might delay the
implementation of autonomy for the forestry and mining sectors.
He said these two sectors could be prone to problems when the
central government shifts its authority to the regions.
"After review, we decided to slow down the process," he said
without elaborating.
The government planned to implement full autonomy by Jan. 1,
2001.
Under the autonomy law, provinces, regencies and mayoralties
will receive greater authority to handle their own affairs.
The director general for general mining at the Ministry of
Energy and Mineral Resources, Surna Tjahja Djadjadiningrat, was
unable to confirm a delay of autonomy in the mining sector.
"I know that it will be discussed at a Cabinet meeting," he
told The Jakarta Post.
Surna was referring to a proposed five-year delay for the
implementation of autonomy in regard to the mining contracts of
foreign investors.
He said earlier he proposed the delay because foreign
investors were concerned over the legal strength of contracts
signed by local administrations.(bkm)