Govt seek ways to ease debt burden

The Jakarta Post, Jakarta

Minister of Finance Boediono said on Wednesday the government would seek ways to help ease the burden of the 2004 state budget in repaying government debts, including foreign ones.

"Every effort to reduce the debt burden will be made," he was quoted by Antara as saying, but quickly added that any measures taken, particularly in relation to foreign debts, must be acceptable to international creditors.

The minister said that if creditor nations offered schemes to reduce the debt burden, the government would consider the options after studying them carefully.

He did not elaborate.

The Ministry of Finance and the House of Representatives state budget committee are currently deliberating the government proposed 2004 state budget. The budget talks were supposed to have been completed last week, but legislators decided to extend them considering the fact that the two sides have yet to agree on a number of issues, including the amount allocated for debt repayments as it was deemed too high. The House is set to resume the talks with the Ministry of Finance immediately.

Under the proposed budget, some Rp 113.3 trillion, or around 27 percent of the total budget, will be allocated to repay domestic and foreign debts. However, such a huge amount limits the funds allocated for development programs.

Some legislators have said that the government should seek ways to reduce the repayment of foreign debts.

The country next year will no longer be eligible for the debt rescheduling facility provided by the Paris Club of creditor nations as the current International Monetary Fund economic reform program will end later this year. The country has enjoyed some $3 billion worth of debt rescheduling facilities from the club over the past couple of years.

Earlier reports said that the Paris Club had offered its Avian Approach for Non-Highly Indebted Poor Countries (Non-HIPC), a category in which Indonesia is included, to reduce its foreign debt burden. Debt forgiveness is normally given to the HIPC debtor category.

"We'll study this possibility too," Boediono said.

Several analysts, however, have said that without the active presence of the IMF, the country would not be able to benefit from the Avian approach, a system under which an eligible debtor country can seek bilateral talks with individual creditors to negotiate a debt relief facility.

In addition to the foreign debts, the government also has a huge domestic debt, resulting from the cost of bailing out banks in the wake of the late 1990s financial crisis. Among of the measures taken by the government so far are issuing new bonds to refinance maturing debts and selling assets.