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.