Govt plans to write off farmers' bad debts

The Jakarta Post, Jakarta

The government plans to write off some Rp 5.7 trillion (US$633 million)-worth of bad debts owed by farmers, according to Minister of Finance Boediono.

He said the amount was part of a total Rp 7.89 trillion in bad debts owed by farmers.

The debt was part of a special credit facility, KUT, channeled by the government to farmers between 1995 and 2000. The interest on the credit is subsidized by the government.

"The Office of the State Minister of Cooperatives and Small and Medium Enterprises (SMEs) has been assigned to check which debts can be written off," Boediono said after a meeting with deputy speaker of the House of Representatives Tosari Wijaya on Wednesday.

Senior legislator Paskah Suzetta said that lawmakers would approve the plans to write off the farmers' bad debts.

But he said that if the loans turned out to have been misused by others, causing them to turn sour, the debtors had to be investigated by the police.

"There should be a verification to prove that the bad debts are related to farmers who are incapable of repaying them," Paskah said.

Aside from a write-off, other alternatives to settle farmers' bad debts discussed on Wednesday included a write-off only of the interest, a rescheduling mechanism, or a transfer of the right to collect the debts from the central government to regional governments.