Donors likely to provide debt relief
Donors likely to provide debt relief
The Jakarta Post, Jakarta
Indonesia moved closer to securing debt relief on Wednesday with
Japan, the country's largest single donor, joining a group of
nations supporting the idea.
According to a source, Japanese Prime Minister Junichiro
Koizumi would announce Japan's willingness to provide debt relief
for disaster-stricken countries -- including Indonesia -- at
Thursday's summit on the Asian tsunami where he is scheduled to
deliver a speech.
"Prime Minister Koizumi will deliver a five-point initiative
in his speech to help the nations affected by the tsunami. And
the most important point is Japan's readiness to provide a debt
moratorium," the source told The Jakarta Post.
The move would be a major step for Japan in its foreign-loan
policy as no country has been granted such a moratorium or
rescheduling policy by the country before, the source added.
Indonesia is the largest recipient of Japanese loans. Data
from Bank Indonesia shows that Japan's official development
assistance (ODA) to Indonesia stood at US$22.08 billion, as of
the first quarter of 2004, of the country's $82.11 billion in
total outstanding foreign debt.
"The details of the conditions of the moratorium will be
discussed bilaterally further by senior government officials,"
the source said when asked about the details.
The United States, Germany, France, Italy, Canada and the
United Kingdom have indicated their willingness to discuss a debt
moratorium with tsunami-stricken countries to help compensate for
the massive funds needed to rebuild their respective areas.
The proposal will be discussed at a Jan. 12 meeting of the
Paris Club, which groups 19 creditor nations that provide loans
to Indonesia. Overall, Paris Club debts total $47.8 billion, with
$3.15 billion in principal and $1.36 billion in interest maturing
in 2005.
Last year, the Paris Club wrote off 80 percent of Iraq's $39
billion foreign debt and interest repayments.
Apart from the moratorium offer, Koizumi will also announce
the dispatch of the country's largest-ever disaster relief
contingent. The personnel will number up to 800.
Indonesia was the hardest hit country in the Asian region with
more than 94,200 fatalities in Aceh and North Sumatra.
President Susilo Bambang Yudhoyono welcomed the idea and said
any form of debt rescheduling would benefit the country.
Asked whether the relief would simply be in the form of debt
rescheduling or a write-off, he replied that he was not sure,
"but even a rescheduling will still be a good opportunity".
Susilo was hopeful that the issue would also be discussed at
the upcoming G-8 meeting.
However, Australian Prime Minister John Howard told reporters
in Canberra he was not sure that a debt rescheduling would be the
best option to help those in need.
"There is no guarantee that if you do it, what is forgiven or
what is the subject of a moratorium will end up going in aid," he
said as reported by Reuters.
Indonesia has a debt of about A$1.4 billion ($1.1 billion) to
Australia, also a member of the Paris Club of creditor nations.
Stronger words came from the international agency Oxfam
advocation director James Ensore, who said all funds from donors
for emergency relief and the rebuilding process should come in
the form of grants, instead of loans, if the donors indeed intend
to help the crisis-affected countries.
Oxfam International is a confederation of 12 independent
agencies operating around the world. It estimated that the
foreign debt burden of the countries affected by the tsunami
reached about $300 billion, while the relief aid pledged stands
at about $30 billion.
The Jakarta Post, Jakarta
Indonesia moved closer to securing debt relief on Wednesday with
Japan, the country's largest single donor, joining a group of
nations supporting the idea.
According to a source, Japanese Prime Minister Junichiro
Koizumi would announce Japan's willingness to provide debt relief
for disaster-stricken countries -- including Indonesia -- at
Thursday's summit on the Asian tsunami where he is scheduled to
deliver a speech.
"Prime Minister Koizumi will deliver a five-point initiative
in his speech to help the nations affected by the tsunami. And
the most important point is Japan's readiness to provide a debt
moratorium," the source told The Jakarta Post.
The move would be a major step for Japan in its foreign-loan
policy as no country has been granted such a moratorium or
rescheduling policy by the country before, the source added.
Indonesia is the largest recipient of Japanese loans. Data
from Bank Indonesia shows that Japan's official development
assistance (ODA) to Indonesia stood at US$22.08 billion, as of
the first quarter of 2004, of the country's $82.11 billion in
total outstanding foreign debt.
"The details of the conditions of the moratorium will be
discussed bilaterally further by senior government officials,"
the source said when asked about the details.
The United States, Germany, France, Italy, Canada and the
United Kingdom have indicated their willingness to discuss a debt
moratorium with tsunami-stricken countries to help compensate for
the massive funds needed to rebuild their respective areas.
The proposal will be discussed at a Jan. 12 meeting of the
Paris Club, which groups 19 creditor nations that provide loans
to Indonesia. Overall, Paris Club debts total $47.8 billion, with
$3.15 billion in principal and $1.36 billion in interest maturing
in 2005.
Last year, the Paris Club wrote off 80 percent of Iraq's $39
billion foreign debt and interest repayments.
Apart from the moratorium offer, Koizumi will also announce
the dispatch of the country's largest-ever disaster relief
contingent. The personnel will number up to 800.
Indonesia was the hardest hit country in the Asian region with
more than 94,200 fatalities in Aceh and North Sumatra.
President Susilo Bambang Yudhoyono welcomed the idea and said
any form of debt rescheduling would benefit the country.
Asked whether the relief would simply be in the form of debt
rescheduling or a write-off, he replied that he was not sure,
"but even a rescheduling will still be a good opportunity".
Susilo was hopeful that the issue would also be discussed at
the upcoming G-8 meeting.
However, Australian Prime Minister John Howard told reporters
in Canberra he was not sure that a debt rescheduling would be the
best option to help those in need.
"There is no guarantee that if you do it, what is forgiven or
what is the subject of a moratorium will end up going in aid," he
said as reported by Reuters.
Indonesia has a debt of about A$1.4 billion ($1.1 billion) to
Australia, also a member of the Paris Club of creditor nations.
Stronger words came from the international agency Oxfam
advocation director James Ensore, who said all funds from donors
for emergency relief and the rebuilding process should come in
the form of grants, instead of loans, if the donors indeed intend
to help the crisis-affected countries.
Oxfam International is a confederation of 12 independent
agencies operating around the world. It estimated that the
foreign debt burden of the countries affected by the tsunami
reached about $300 billion, while the relief aid pledged stands
at about $30 billion.