Govt confirms RI seeking debt relief

Govt confirms RI seeking debt relief

JAKARTA (JP): Minister of Finance Boediono confirmed on
Tuesday that Indonesia would seek debt relief from international
creditor nations, especially those grouped in the Paris Club, in
order to ease pressure on the 2002 state budget.

"I don't want to use the word haircut, but we are seeking debt
relief from the Paris Club donor countries," Boediono told
reporters on the sidelines of a hearing with the House of
Representatives' Commission IX on the state budget and finance.

Boediono was asked to respond to a statement made by Vice
President Hamzah Haz on Monday that Indonesia would seek a
reduction in its debt from international donor countries in order
to ease pressure on the state budget.

"We have to convince donor countries that Indonesia is in dire
need of debt rescheduling and relief," Hamzah was quoted as
saying by the Young Indonesian Entrepreneurs' Association (Hipmi)
chairman Haryadi Sukamdani.

Boediono said the government would try its best to secure
debt relief from the Paris Club donor countries, but refused to
call it a debt haircut.

"Debt relief could also mean delaying the payment of our debt
to the Paris Club donors," said Boediono, adding that the move
was taken in view of President Megawati Soekarnoputri's appeal to
international donor countries to give Indonesia some breathing
space in honoring its international obligations.

Indonesia's sovereign debt is estimated at around US$70
billion.

State Minister for Development Planning/Chairman of the
National Development Planning Board (Bappenas) Kwik Kian Gie also
admitted on Tuesday that the government had long been seeking
debt relief from donor countries.

"But the request was vehemently rejected by donor countries,
who argued that Indonesia was not entitled to a haircut," Kwik
said on Tuesday as quoted by Detik.com.

According to Kwik, Indonesia could request a debt reduction,
"but if Indonesia unilaterally decides not to service its debt,
an economic embargo would immediately be imposed on it and not a
single dollar would flow into the country either from the
Consultative Group on Indonesia, the World Bank or the
International Monetary Fund."

The government is scheduled to meet with the Paris Club early
next year to seek the rescheduling of debts maturing this year
and next year.

Last year, the government agreed with the Paris Club to
reschedule some $5.8 billion in sovereign debt maturing between
2000 and 2002.

Separately, senior finance ministry official Sjafruddin
Temengung was quoted by Reuters on Tuesday as saying that
Indonesia would seek to reschedule an extra $6 billion in foreign
debt maturing between April 2002 and March 2004 through the Paris
Club.(tnt/03)