Indonesia needs $6b in loans to plug budget deficit
Indonesia needs $6b in loans to plug budget deficit
JAKARTA (JP): National Development Planning Board (Bappenas)
chairman Boediono said on Saturday that Indonesia needed between
US$5.5 billion and $6 billion in new foreign loans to plug the
1999/2000 state budget deficit.
He said part of the needed loans had been secured after the
country's largest donors, including Japan and the World Bank,
confirmed their financial support earlier this year.
"The total (overseas loans) we need is between $5.5 billion
and $6 billion for the 1999/2000 fiscal year. But some (of the
needed loan) have been pledged," he announced after attending a
ceremony at the State Palace.
Boediono said the remaining budget shortfall was expected to
be covered by commitments from donors at the upcoming
Consultative Group on Indonesia (CGI) meeting in Paris.
Finance minister Bambang Subianto said in February when
proposing the current state budget which ends in March 2000 to
the legislature, that Indonesia would need some $10.32 billion in
overseas loans.
The total consisted of $6.32 billion in program loans to
finance various development programs and $4 billion in project
loans.
Bambang said the $4 billion in project loans was secured
because they were loans carried over from the previous fiscal
year.
He said of the remaining $6.2 billion in program loans, some
$4.4 billion had been secured after the World Bank and the Asian
Development Bank pledged to each provide $1 billion, and Japan
$2.4 billion through the so-called Miyazawa Plan.
This leaves a shortfall of $1.9 billion, which officials hope
to cover at the CGI meeting on July 27 and July 28.
Director general of budget Darsyah declined to confirm this
figure.
"I don't know how much Indonesia will seek at the upcoming CGI
meeting. This is decided by a few ministers," he said.
However, based on Boediono's statement, Indonesia would need
to secure between $1.1 billion and $1.6 billion at the upcoming
donors meeting.
An official at Bappenas who declined to be named said the
improving economy as compared to when the state budget was drawn
up had lowered the amount of loans needed.
Indonesia particularly needs program loans to help finance the
costly bank restructuring program, which requires Rp 17 trillion
($2.54 billion) of the current state budget.
The government, the World Bank and the chairman of the CGI
have been pressured by opposition parties and several non-
governmental organizations to postpone the upcoming donors
meeting.
Opposition parties say new loan negotiations should be held
under the country's next administration, which will be formed
later this year.
However, Boediono said a delay of the CGI meeting would damage
confidence in the economy because the market would be nervous
about the hole in the state budget.
He also said on Saturday the current administration would only
negotiate for loans to finance the 1999/2000 state budget.
He said the government would not negotiate for loans needed
for the 2000/2001 state budget, adding this would be the
responsibility of the next administration.
"We'll just inform the donors about our estimated financial
needs (for the next state budget)," he said.
Several government officials earlier said several CGI members
were ready to provide some $5 billion in new loans at the next
CGI meeting. The country received some $7.9 billion from CGI last
year.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita is scheduled to leave for Tokyo on Monday,
where he will meet with high-ranking Japanese officials and seek
Japan's support at the CGI meeting.
Japan is Indonesia's largest donor.(rei/prb)