Foreign Debts

There is an impression that the government does not really know how to settle the debt problem. Today, debt rescheduling is bruited about.

Indonesia's foreign debts have swollen to Rp 741 trillion this year. Domestic debts have also risen to Rp 659 trillion as a result of banks recapitalization. Despite the swelling debts, the government is still optimistic that Indonesia will be able to fulfill its financial obligations.

However, it seems that the government still does not know how to seek a solution to the debt problem. The government has cited the need to implement debt rescheduling. The "Good Boy" (Indonesia's nickname used by the creditors) are seen taking hasty steps.

Without thinking of the multiplication impact, the government has extended the agreement with the IMF to 2003, and even once cited the possibility of extending the agreement up to 2004, in a bid to expedite the Paris Club meeting in April 2002, which will discuss debt rescheduling.

Indonesia's external debts have since the outbreak of the economic crisis reached an alarming level. Last year, Indonesia's debt repayment only totaled over Rp 46 trillion because of a debt moratorium for several creditors. Thus, the debt repayment burden will double this year. The government has hastily asked for rescheduling. Will this strategy be continuously applied?

We are all concerned over the fact that Indonesia, which is rich in oil and other mining products, has become a poor country. Leakages have occurred in the mechanism of the circle of public finances as bigger part of the assistance goes back to the donor countries.

It is impossible to commercialize natural resources through the capital market since those sources have been "mortgaged" to the CGI through what is called negative pledge. The debt service ratio reached 40 percent last year. Who is to blame for that condition, the government bureaucracy and its foreign analysts or the World Bank, whose role in Indonesia is as old as the New Order itself?

Blaming each other will only be futile. It is necessary to carry out structural reform in running the government. Debt rescheduling should be followed by debt cutting. Critiquing the government's next steps in debt management is our common responsibility.

-- Pikiran Rakyat, Bandung