CGI convenes amid rising criticism

CGI convenes amid rising criticism

The Jakarta Post, Jakarta

The Consultative Group on Indonesia (CGI) is set to start its
two-day annual meeting on Wednesday to decide on a new loan
commitment to help finance Indonesia's 2004 state budget, amid
rising criticism of the donor grouping.

As the CGI is expected to provide fresh loans at a range of
US$2.3 billion to $3 billion, calls intensified on Tuesday for
the country to stop foreign borrowing as it only burdens the
country further.

The Indonesian Forum for Environment (Walhi) was the latest to
join the group, and even demanded the CGI be dissolved.

"The CGI is not giving anything. It's just a machine which
maintains Indonesia's debts," Walhi deputy director Ridha Saleh
told a press briefing.

Ridha said that even without the new loans, the payments of
amortization and interest of the country's $77 billion sovereign
debts are eating up to 35 percent of the state budget, limiting
money for development programs and bringing suffering to the
people.

With close to 40 million living in poverty, Ridha claimed, the
country was currently on the brink of collapse. So, rather than
seeking new loans from the CGI, he continued, the government
should instead optimize the use of the country's rich resources.

Walhi's remarks followed similar assessments issued by noted
economists, including former economic minister Rizal Ramli and
Revrisond Baswir of Gadjah Mada University attacking the role of
the CGI in the country.

Both agreed that Indonesia had always been on the weaker side
and was never able to stand as the equal partner of the country's
traditional donors.

They said that so far, the CGI had acted as a cartel in which
Indonesia, with its weak bargaining position, had barely a say in
the negotiating process.

Revrisond also called for the CGI to be dissolved. He said
that, not only did the presence of CGI mean the increase of debt,
but its effectiveness had been questioned in light of various
reports suggesting massive embezzlement in the CGI loans, thus
reducing its benefits.

Both urged the government to seek bilateral commitments as a
replacement.

State Minister for National Development Planning Kwik Kian
Gie, himself an outspoken figure, said on Tuesday that Indonesia
might still need the CGI this year, but not next year.

"In my opinion, we won't be needing the CGI as of next year,"
he said, but, if new loans were unavoidable the country should
then announce to the world that any country could come and
negotiate loans directly with the government.

"The government should take charge of negotiations, unlike
what we have now with the CGI, which always sees the World Bank
as the chairman of the meeting."

Earlier, the World Bank had said that the country might obtain
some US$2.7 billion from CGI to help finance next year's budget
deficit from the CGI. This is the same amount pledged by CGI last
year for the current budget.

Proponents, however, have said that the role of the CGI was
still crucial for the cash-strapped country especially as it
would no longer be eligible for the Paris Club debt rescheduling
facility next year with the termination of the current
International Monetary Fund program at the end of this month.

Eyebox

Govt yet to complete reform targets

The government said on Tuesday it had yet to complete 16
economic action targets scheduled for completion by the end of
November, as outlined under the White Paper document.

Antara said that Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti had reported to President Megawati
Soekarnoputri that as of November, a total of 35 action targets
had been completed as scheduled, leaving 16 other targets
unfinished.

The unfinished actions includes: the sale of majority stakes
in Bank Lippo and Bank Internasional Indonesia (BII); the sale of
assets -- property and credits -- under the Indonesian Bank
Restructuring Agency (IBRA); the submission of a bill on trade to
the House of Representatives; the drawing up of the Anti-
Corruption Court blue print, and blue print of reform at the
Commercial Court.

The White Paper is a series of economic reform targets the
government has to achieve in 18 months starting from August this
year. It comes after the government's decision not to extend the
current IMF-sponsored reform program when it expires at the end
of this year.