Indonesia may face tough time at upcoming CGI meeting

Indonesia may face tough time at upcoming CGI meeting

JAKARTA (JP): The government may have a hard time convincing
the international donors grouped in the Consultative Group on
Indonesia (CGI) to support the 2001 state budget deficit, former
finance minister Bambang Sudibyo cautioned here on Monday.

Bambang said that the donors would thoroughly question the new
economic team on several unresolved national issues, particularly
the recent Atambua incident in which three United Nations
humanitarian workers were killed by pro-Indonesia East Timor ex-
militiamen in East Nusa Tenggara.

"I think the next CGI meeting will not be as smooth and as
easy as the one held in Jakarta last November because of the
potential national issues to be questioned by donors," he told
reporters on the sidelines of a seminar on the economy.

"What I feel now is intense (international) pressure on the
country," he added.

Bambang was dropped by President Abdurrahman Wahid in August
during a massive Cabinet reshuffle.

The next CGI meeting is to be held in Tokyo in the middle of
next month. The government has said it expects some US$4.8
billion from the donor grouping to help finance part of the 2001
state budget deficit estimated at Rp 53 trillion ($6.23 billion).

The Abdurrahman administration is currently under strong
pressure from the international community over the Atambua
incident, with the U.S. threatening to launch an economic embargo
if government fails to take action against the perpetrators of
the incident which reports said involved military officials.

Bambang said other issues that must be explained by the
government at the upcoming donors' meeting included environmental
issues, the communal clashes in Ambon (in Maluku province), legal
reform, good governance and corruption.

"Other potential issues may also include Bruneigate and
Buloggate," he said, respectively referring to the case of
Abdurrahman personally receiving a cash contribution from the
Sultan of Brunei and the alleged corruption of funds by people
linked to the President from the State Logistics Agency or Bulog.

Bambang said that the loan from CGI was crucial for the
country because it would be a major source of plugging the budget
deficit.

"I heard that the government is expecting some $4.8 billion
from CGI," he said.

He said that if the country failed to secure the CGI loan, the
government would have to significantly cut the budget deficit to
a level that could be covered by proceeds from the privatization
of state companies and the sale of assets under the Indonesian
Bank Restructuring Agency (IBRA).

"But if this would mean that the government would be forced to
slash spending for development programs (investment) and the
budget would have a contractive, instead of expansive, impact on
the economy. This is the problem," Bambang added.

The country's new economic team, however, has openly expressed
confidence that the donors will support Indonesia at the next
Tokyo meeting.

Coordinating Minister for the Economy Rizal Ramli, Minister of
Finance Prijadi Praptosuhardjo and acting governor of Bank
Indonesia Anwar Nasution are currently in Prague, Czechoslovakia,
to lobby the donors gathering for the International Monetary Fund
and World Bank annual meetings.

Separately, New York Times columnist Thomas Friedman said in
the seminar that he doubted the U.S. would impose an embargo on
Indonesia.

He said that the threat was merely a signal to push the
Indonesian government to resolve the Atambua killings. "There
will be no embargo, trust me," he said.

Bambang added that the current economic team would face a
tough challenge in designing the state budget because of the
implementation of the new regional autonomy policy starting in
January.

"The challenge for the government to design the next state
budget is quite formidable," he said.

He explained that because of the autonomy policy, the
government had to allocate a hefty Rp 70 trillion of the 2001
state budget to provinces, while the central government also had
to finance other "big items", notably the cost of the bank
recapitalization program, estimated at between Rp 70-80 trillion,
and the cost of various subsidy programs, at more than Rp 40
trillion.

"That's why the government has to make a deficit budget ...
and one source of financing the deficit is a foreign loan from
CGI," he said.

Earlier, on the weekend, Prijadi told The Jakarta Post from
Prague that the government was lobbying the international donors
to provide assistance to help overcome the negative impact of the
implementation of the autonomy policy on the state budget. (rei)