CGI review positive ahead of Paris Club meeting
CGI review positive ahead of Paris Club meeting
Berni K. Moestafa, The Jakarta Post, Jakarta
A meeting of representatives from the Consultative Group on
Indonesia (CGI) painted an upbeat picture of the Indonesian
economy, which may well add oil to the machinery during debt
rescheduling talks with the Paris Club of creditor nations.
However, the CGI also called for more concrete reform actions
over the next few months to bolster confidence in the country's
economy and the government, the World Bank said in a statement.
It said Wednesday's CGI meeting was a quarterly review on the
development issues since the last CGI meeting in November 2001.
On the macroeconomic side, World Bank Country Director Mark
Baird said that donor countries were thus far satisfied.
The World Bank is a key member of the CGI, which groups
together Indonesia's main foreign creditors. The same members
also sit in the Paris Club of Indonesia's sovereign creditors.
Securing a positive note on macroeconomic stability increases
chances for Indonesia to receive lighter rescheduling terms for
its debts during the Paris Club meeting.
Unlike Pakistan, whose role in supporting the U.S.-led war in
Afghanistan had earned it a generous Paris Club deal according to
analysts, Indonesia's position is seen as more difficult.
The government foot dragging on a number of reform areas such
as justice and forestry, have been a constant hindrance to talks
at both the CGI and the Paris Club.
Another fallout from the slow reforms, is that investors shy
away from Indonesia as they seek security over their investments.
The World Bank said progress was underway, but added that CGI
donor countries agreed that concrete actions were still needed.
"These include the establishment of an independent anti-
corruption commission, enactment of a robust anti-money
laundering law and implementation of more pro-poor regional
transfer mechanism," the bank said.
While slow reforms may undermine Indonesia's position at the
Paris Club, strong support so far from the International Monetary
Fund (IMF) may be a stronger determinant.
To a large extent, the Paris Club makes its decisions based on
inputs from the IMF.
"Macroeconomic stability is on a sounder footing," said the
IMF senior representative for Indonesia, David C. Nellor.
"Progress has also been made in structural reforms, including
the reduction in subsidies, starting the privatization program
and embarking on a sound process for the sale of BCA," he said.
The Paris Club meeting is slated for the first week of April.
Running at a deficit of some Rp 42 trillion (about US$4
billion) this year, the state budget is unlikely to survive
without a Paris Club deal.
The government has yet to decide how debt it wanted to
rescheduled. This year's budget assumed Rp 36.77 trillion in both
debt rescheduling and new program loans.
Baird further said that better macroeconomic performance gave
the government breathing room to address longer term issues.
These, he said, concerned poverty reduction programs as well
as overhauling the justice sector.