Critics belittle Paris Club deal
Critics belittle Paris Club deal
The Jakarta Post, Jakarta
Critics believe the US$5.4 billion debt rescheduling deal
obtained by the government last week from the Paris Club of
creditor nations will be of little benefit to the country, whose
stock of debts is still unbearable.
"It (the Paris Club deal) is a disaster (for Indonesia)," said
University of Gajah Mada economist Revrisond Baswir.
He said extending debt repayments to between 18 and 20 years
would only succeed in passing the huge debt burden onto the next
generation. This includes debts that resulted from the misuse and
squandering of loans by the former authoritarian leader Soeharto
and his cronies.
According to one estimate, around 30 percent of past foreign
loans were embezzled.
"We do not have to pay these debts (from corrupted loans);
there must be a write-off," he said.
Revrisond also said deals with the Paris Club normally came
with conditions attached, including trade liberalization,
privatization and other economic policies that could prove
disadvantageous for ordinary Indonesians.
As an example, he said that opening up the country's
agricultural sector would cause serious problems for local
farmers, while privatization would result in layoffs.
He added that the debt rescheduling deal would put Indonesia
under the watchful eyes of the International Monetary Fund and
other lenders for a very long time.
Indonesia's public debt reaches a staggering $131 billion, or
the equivalent of last year's gross domestic product. Some $71
billion is owed to foreign lenders.
Soegeng Bahagio, of the International NGO Forum on Indonesian
Development, said the debt rescheduling deal would only provide
temporary relief for the government's "cash flow" problem.
He said that without a fundamental solution to the country's
huge debt burden, the state budget would continue to suffer
serious "bleeding".
He urged the government to pursue a debt write-off or the
country would eventually suffer the kind of debt problems now
being experienced by Argentina.
He said that based on the 2000 state budget, each Indonesian
must pay approximately $45 per year to foreign creditors, while
they only receive $2 per year in terms of government health and
education programs.