Govt says no plan for debt rescheduling, haircut
Govt says no plan for debt rescheduling, haircut
Rendi A. Witular, The Jakarta Post, Jakarta
Key economic ministers asserted that there was no plan to seek
rescheduling on the payment of government debts and interest from
overseas creditors, since the country was not in a desperate
position to warrant seeking such a facility.
Minister of Finance Sri Mulyani Indrawati said on Thursday
that the government would still comply with the 2006 state
budget, in which there was no room for any delay in paying debts
and interest or seek for a debt discount from creditors.
"We are still working based on the state budget assumptions
next year, which have been approved by both the government and
the legislators. Therefore, a debt rescheduling policy is
unlikely," she said.
She responded to a statement by her successor State Minister
for National Development Planning Paskah Suzetta, saying that the
government was studying a plan for delaying the payment of debts
and interest as well as seeking a debt haircut.
Paskah said the plan would help the country allocate more
resources for financing several infrastructure projects and
provide incentives for the business community in order to drive
higher economic growth.
Coordinating Minister for the Economy Boediono agreed with
Mulyani's suggestion over the debt rescheduling.
"The plan to delay debt payment is a merely one person's
opinion, not the official stance of the Cabinet, which is needed
to approve such a move," he said, without directly intending to
refer to Paskah's plan.
Indonesia, Southeast Asia largest economy, has around US$133
billion in domestic and overseas debts.
Creditors grouped under the Paris Club granted in March a debt
and interest payment suspension worth more than $3 billion for a
certain period of time.
The decision was taken following the instability of the
country's state budget due to the devastating tsunami on Dec. 26,
2004 that killed more than 200,000 people in Aceh and part of
North Sumatra.
In the 2006 state budget, the government will spend around Rp
91.6 trillion ($9.25 billion) for servicing debts and interest
based on the assumption that the rupiah remains at Rp 9,900
against the U.S. dollar, inflation at 8 percent and the three-
month Bank Indonesia SBI interest rate at 9.5 percent.
A request for rescheduling is also unlikely since Indonesia is
not under the International Monetary Fund (IMF)'s program for
economic recovery.
Indonesia graduated from the IMF program in 2004 after
receiving guidance from the agency since the financial crisis in
1998.