House supports creditors' meeting

JAKARTA (JP): The outgoing House of Representatives said on Monday it supported the government's decision to go ahead with the annual meeting of Indonesia's creditor consortium, the Consultative Group on Indonesia (CGI), in Paris on July 27 and July 28.

"We should accept the bitter reality that the government has still to plug its budget hole for the current fiscal year with foreign loans," Tayo Tarmadi, chairman of the House's finance and budget commission told reporters.

Several major political parties and most non-governmental organizations have demanded that the upcoming CGI meeting be postponed until the formation of a new government later this year.

Opponents of the meeting have argued that the present transitional government has no longer any authority to make new important decisions and external commitments after the defeat of the ruling Golkar party in the June 7 general election.

Provisional results put Golkar in only third place after the Indonesian Democratic Party of Struggle and the National Awakening Party.

Tayo pointed to great risks to the state budget for the current and next fiscal years if the creditors' meeting was postponed in view of the government's heavy reliance on foreign loans for covering its budget deficit.

He said the upcoming meeting would also seek foreign loan commitments for the 2000/2001 budget of the new government.

"Whatever is decided on and committed by the present House and government should be honored by the next government," Tayo added.

Informed sources at the finance ministry said the government still needed US$2 billion to cover its 1999/2000 budget deficit, which was estimated at $10.3 billion.

The government received almost $8 billion last year in new loan commitments from CGI creditors.

The sources said CGI's sovereign and multilateral creditors had indicated they would pledge $5 billion in new loans at the upcoming meeting in Paris.(vin)