Govt focuses on bilateral talks to settle foreign debts

Govt focuses on bilateral talks to settle foreign debts

Dadan Wijaksana, The Jakarta Post, Jakarta

The government will have to rely on bilateral talks with
individual creditor nations to reschedule the country's huge
foreign debts after it graduates from the International Monetary
Fund (IMF) at the end of the year.

"With the absence of the IMF economic program, we can no
longer ask for debt relief through the Paris Club or the London
Club.

"I think diplomacy has to be exercised. Indonesia has never
missed any payments since 1950 and I intend to keep it that way
in dealing with our debts," Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti said on Tuesday as reported by Antara.

Under the auspices of the IMF, the government has successfully
asked for debt rescheduling facilities from foreign creditors,
both governments and private lenders. While the Paris Club groups
foreign creditor nations, the London Club groups foreign private
lenders.

The talks with the Paris Club and the London Club are seen as
a crucial part of efforts by the government to keep the country's
huge foreign debts, standing at more than US$70 billion, at a
more manageable level.

With its massive pressure on the country's fiscal balance,
debt rescheduling schemes are a decisive way to lead the country
out of the debt trap.

However, with Indonesia expected to end a four-year long loan
program with the IMF, the Paris Club or London Club facilities
will no longer be possible as foreign countries and international
financial institutions always make their assessments on the
country's economy based on the IMF's evaluations.

Indonesia's debts to the IMF total US$13 billion, with only
about $3 billion repaid. There is still about $2 billion of the
IMF's loan commitment that has yet to be disbursed.

Elsewhere, Dorodjatun said that the government was drawing up
an exit strategy from the IMF program. A team has been tasked to
formulate economic policies that are expected to replace various
economic reform programs that the government has carried out with
the fund.