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)