Foreign Debts

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