Economists urge govt to seek debt waiver

Economists urge govt to seek debt waiver

JAKARTA (JP): Economists have called on the government to
reschedule repayment of its foreign debts or declare a debt
moratorium to help speed up the country's economic recovery.

Sri Edi Swasono and Didik Rachbini said yesterday that the
repayment of accumulated foreign debts was a heavy burden for an
economy saddled by a monetary crisis.

"It is a fact that we are trapped in debts," Sri Edi told a
room full of students at Mercu Buana University in West Jakarta.

"Without rescheduling, we will only end up borrowing more
money to cover our debts, creating more uncertainty for the
future."

He added that the debt burden was beyond normalcy.

The government announced in February that the nation's foreign
debt as of the end of last year was US$136.09 billion, consisting
of $67.77 billion owed by the public sector, and $68.31 billion
by the private sector.

Government annual overseas debt services accounted for some 25
percent of the total state budget. The government allocated Rp
37.8 trillion to service foreign debts in the current fiscal
year, under an assumption of Rp 5,000 per U.S. dollar.

"If we do not have to repay our debts and interest for five
years, we would have enough money to run the engine of the
domestic economy," Sri Edi said.

"In five years, we would have enough money to begin repaying
the debts."

Didik said debt rescheduling would enable the government to
use the funds normally allocated for debt repayment to finance
its development spending and therefore stimulate growth.

Essential in this effort, he added, would be savvy economic
diplomacy to negotiate with foreign debtors.

"There must be a strong team, consisting of people responsible
for the debts or those who made the loan deals such as (the
President's economic advisor) Widjodjo Nitisastro."

Didik, an assistant to the president of Mercu Buana
University, said the country's diplomacy was weak as technocrats,
officials and ambassadors lacked the initiative to relieve the
country of its burden, and merely depended on the central to find
answes.

"Depending on our negotiations, we could perhaps get the
creditors to issue write-offs of some of our debts, like they did
for the Latin American countries."

Sri Edi said Indonesia would obtain the same privilege of
freezing its debts repayment if it could prove to the
International Monetary Fund that it was complying with the terms
of their joint agreement.

The government announced a supplementary economic reform
agreement last week, in addition to the two other reforms agreed
upon last January and October, to obtain the IMF's second tranche
of bailout money amounting to US$3 billion.

"The government had completed one stage of our struggle to
stabilize the economy with the IMF. This is fine for a while,
but we must negotiate our debts as soon as possible after the
government proved that it could still manage the economy," he
said.

"(The reason) why we haven't asked for rescheduling in dealing
with the IMF so far is mere arrogance -- 'poor but conceited',"
he said. (das)