Creditor nations approve RI's debt swap proposal
Creditor nations approve RI's debt swap proposal
The Jakarta Post, Jakarta
The government claimed on Tuesday it had received agreement
from eight creditor countries for debt swap schemes, which are
expected to help ease the burden on the state budget in the
repayment of sovereign debt.
Senior official at the State Ministry of National Development
Planning Koensatwanto Inmpasihardjo said of the 15
creditor nations being offered debt swap proposals, eight had
welcomed the scheme while the remainder had either completely
rejected it or were still studying it.
Koensatwanto said the eight nations comprised Canada, Finland,
France, Germany, Italy, New Zealand, Sweden and the UK, while
rejections had come from Australia, Denmark, Japan and South
Korea. The others were still undecided, pending further
consideration.
The debts swap is a concept that the government has been
developing, as part of efforts to take pressure off the state
budget for debt repayments, especially foreign ones.
Although details are still sketchy, the concept is largely
tied to the country's foreign debt restructuring program, such as
that via the Paris Club mechanism.
The country's total public debt currently stands at around
US$132 billion, or some 90 percent of the country's gross
domestic product (GDP) for this year, estimated at around $165
billion.
Of that amount, $70 is owed to foreign lenders.
GDP measures total value of goods and services produced in a
year.
Such a huge debt burden has created budgetary constraints,
limiting the amount of funds allocated to development programs,
while a huge amount must be allocated to service debt.
For example, the allocation for debt repayment this year
stands close to Rp 120 trillion, which accounts for around 35
percent of entire state expenditure.
Elsewhere, Koensatwanto said the debt swap agreement with the
eight countries covered various schemes such as swaps for nature
conservation and for poverty eradication.
However, he fell short of explaining how much debt reduction
the government would obtain from this, saying that agreements
with each creditor nation still had to be worked out.
Reports have said that Germany has agreed to set aside 50
million deutschemarks for the debt swap scheme.
He also said that Japan had rejected the program on the
grounds that such a scheme would be considered some sort of debt
haircut, a very sensitive issue in the country at present.
As for Austria, it decided to oppose the swap as it did not
have a legal basis on which to consider it.