Handling Indonesia's debts

Handling Indonesia's debts

The central bank, Bank Indonesia, has said that the country's total foreign debt has reached US$137.6 billion -- consisting of the government's debts ($74.16 billion) and corporate debts ($63.43 billion).

The government has been trying to repay its debts, which accounts for the sharp decrease in the state budget.

The Paris Club has rescheduled Indonesia's debts since 1988, but this has not had any great impact.

Some non-governmental organizations and economic experts have suggested that Indonesia seek a debt haircut.

The government however would not dare do such a thing, arguing that this might cause a drop in Indonesia's international economic rating.

Standard and Poor's has lowered that rating from CCC+ to CCC.

The government has also been eyeing two alternatives for the debt write-off -- a debt-for-nature swap or converting old debts into grants.

The German government wants to convert a $50 million loan into a forest conservation fund.

The concept of turning debts into grants will be presented at the Paris Club meeting on Feb 10-11 next year.

But whatever efforts are made, we should support our government in reducing the country's huge debt.

The government itself should allay the fears of foreign creditors, to ease Indonesia's burden.

-- Republika, Jakarta