Govt will not seek fourth Paris Club deal
Govt will not seek fourth Paris Club deal
The Jakarta Post, Jakarta
Despite the devastating impact of the Bali bombing on the
economy, the government said it would maintain its commitment not
to seek further debt restructuring facilities through the Paris
Club of creditor nations.
"Despite what has happened in Bali, our commitment that we
will not seek a fourth edition of debt relief from the Paris Club
remains," Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Jakti told a seminar here on Tuesday.
The Paris Club, which groups together the country's major
sovereign creditors for talks on debt rescheduling, granted the
country in April a restructuring of some US$5.4 billion of a
total $7.5 billion in foreign debt due between April 1, 2002 and
Dec. 31, 2003.
Government officials have since repeatedly stated that the
April deal was the last, saying that any restructuring of foreign
debts would no longer be needed in the future, based on an
assumption that the country would experience a zero deficit in
its state budget for the 2004 fiscal year.
However, the recent bomb blasts in Bali have cast doubts over
the government's capability to meet the zero deficit target. The
impact is expected to be so huge that the government decided to
revise almost all assumptions in the 2003 draft budget, including
the deficit target.
The figure is not yet final, but it is widely expected that
the deficit target would be raised from the initial Rp 26
trillion, or 1.3 percent of the country's gross domestic product
(GDP), to between 1.6 percent and 2 percent of GDP.
The higher-than-expected deficit comes partly as a result of
higher spending in productive sectors.
The government plans to increase the budget for development
spending next year to boost economic activities in a bid to
maintain high economic growth despite the damaging impact of the
Bali bomb blasts on the economy.
The government now has a staggering $131 billion in total
debts, or around 90 percent of GDP, including $70 billion in
external loans. This year alone, budget allocation for the
servicing of the debt reached Rp 136.2 trillion.