CGI slammed for being insensitive about RI's debts

CGI slammed for being insensitive about RI's debts

Dadan Wijaksana, The Jakarta Post, Jakarta

The meeting of the Consultative Group on Indonesia (CGI) was a
disappointment because it did not address measures needed to
tackle the country's huge debt, International NGO Forum for
Indonesia Development (INFID) says.

INFID, a grouping of a number of non-governmental
organizations (NGOs), said the new loan pledge announced on
Thursday showed the international donors encouraged -- to some
extent -- the country to remain trapped in the debt circle.

"The forum did not seriously discuss efforts to reduce our
debts, domestic or foreign. I'm disappointed with it," INFID
director Binny Buchori said Friday.

Binny said such a situation would only push Indonesia deeper
into debt trouble.

"Although the debt-to-gross domestic product (GDP) ratio has
now declined to around 60 percent, the outstanding (debt) is
still huge."

At the end of the two-day CGI meeting, the country's
traditional foreign donors agreed to provide US$3.4 billion in
new loans and grants for the country next year. Some $2.8 billion
of the loans would go to finance the 2004 state budget.

Some economists have said the CGI loan is crucial for the
country as it would no longer be eligible to the Paris Club debt
rescheduling facility once the current International Monetary
Fund program expires at the end of this month.

Excluding the latest CGI loan pledge, the country's foreign
debt outstanding as of September stood at $77.1 billion, while
domestic debts stood at Rp 619.7 trillion.

Despite the fact the CGI was never intended as a forum for the
country to seek debt relief facility, Binny said it was the least
the grouping of 30 multilateral and donor countries could do, if
they were seriously concerned about Indonesia.

Airing similar concerns was Vice President Hamzah Haz, who
asked the grouping to give Indonesia breathing space in repaying
its debts to the CGI, by allowing it to temporarily skip the
payments, so that the country could provide higher allocations
for more productive spending.

"The CGI should give Indonesia such a debt relief until after
the economy has fully recovered," Hamzah was quoted by Antara as
saying, adding the CGI could ask for the repayment after the
economy manages to grow by around 7 percent.

During the period of time, he added, the government could
allocate more on other crucial spending as the pressure on the
state budget lessens.

The government said it had no alternative but to look for
external funding, to help it finance the state budget, which
ironically has been burdened heavily by the payments of existing
debts, both domestic and foreign.

Under the 2004 budget, for instance, Rp 131.2 trillion has
been earmarked to repay domestic and foreign debts, both the
interest and principal. The figure, which accounts for more than
one third of the budget's total expenditure, is almost double the
amount set for development spending which stands at Rp 70.9
trillion.

Some analysts however, while agreeing the debt level was
alarming, said they were of the opinion that it remained
manageable. What's more important was ensuring how to make the
best use of those loans, for the good of the country.

The last thing Indonesia needed was to have its debt level
increased, which means more burden on the budget, without taking
the benefit out of it, they said.