Govt needs Rp 20t to rebuild Aceh, N. Sumatra

Rendi A. Witular, The Jakarta Post/Jakarta

The government has estimated that the cost to rebuild tsunami- bludgeoned Aceh and parts of North Sumatra soared to at least Rp 20 trillion (US$2.2 billion) over the next five years, twice the initial projection of Rp 10 trillion.

The sharp jump was due to the fact that many government agencies had not yet completed a thorough assessment of the damage, said the Ministry of Finance's Director General for State Treasury, Mulia Nasution, on Friday.

He explained that the government had planned to finance the reconstruction process mostly from grants and loans. While funds from the state budget would be allocated to finance the development in other areas and sectors.

"In the short term, the funds will be allocated for housing, health facilities and public infrastructure," he said.

According to the directorate, the government is estimated to receive at least about US$1 billion in aid grants from foreign countries, with the balance in the form of soft loans.

Donor countries, private citizens and other agencies have so far pledged $4 billion for relief and reconstruction for the affected countries.

Mulia said a special team from the ministry is scheduled to fly to France next week to follow up on the financial aid pledged by the donors during the Paris Club meeting on Jan. 12.

In the meeting, Indonesia is expected to negotiate for soft loans offered by the donors, including a possibility that the loans could have an interest rate of between 2 percent and 4 percent with a maturing period of between 20 and 30 years, he said.

Aside from that, the government will also have further talks on a debt moratorium offered by a number of donor countries and agencies.

"We will ask the donors about the moratorium and which debts are eligible for it. If there is a clear sign, this will be positive for the condition of our state budget over the next two or three years," said Mulia.

Concerning the 2005 state budget spending for Aceh and North Sumatra, Mulia said the amount was less than the government had initially expected -- less than Rp 100 billion from a provision of some Rp 300 billion.

The lower figure is due mostly to the staggering amount of financial donations from the public and from foreign countries.

Mulia also said that the government remained on track with its plan to issue global bonds worth about $1 billion this year despite the tsunami disaster.

The state budget calls for the government to issue local and international bonds amounting to a total of Rp 43 trillion.

According to Mulia, the ministry has sent request proposals to a number of investment banks and securities houses to help publicize and disseminate the plan, and at the same time shortlisting the arrangers for the bonds.