Indonesia to Avoid Foreign Debt, IMF Lifeline

Indonesia to Avoid Foreign Debt, IMF Lifeline

Jakarta. President Prabowo Subianto said Monday that Indonesia would try to avoid foreign debt and lifeline offers by the International Monetary Fund or IMF, although Jakarta remains open to low-interest arrangements.

Speaking at Indonesia’s largest Muslim organization Nahdlatul Ulama event in Jombang, Prabowo laid out his ambitions of making the country financially self-reliant.

“We are trying not to borrow too much money from everywhere. Inviting [other countries] for investment is okay. But if we do take out loans, we will pick those with the least possible interest,” Prabowo said.

Prabowo recalled how the IMF had not long ago offered his finance minister Purbaya Yudhi Sadewa a lifeline. Purbaya claimed that the IMF and the World Bank had pitched credit facilities — worth between $20 billion and $30 billion — to countries affected by the US-Iran war.

“I was surprised by the IMF’s offer, … but we declined. Thank you [for the offer], but Indonesia can still make it without IMF loans.”

Purbaya, too, at the time had told the IMF that Indonesia was far from being cash-strapped. The minister even said at the time that Indonesia boasted up to Rp 420 trillion (almost $23.7 billion) in standby funds, some of which had gone to banks to boost spending.

Prabowo also remained upbeat that Indonesia could get millions of its people out of poverty.

As of the second quarter, Indonesia’s external debt totaled $453.4 billion, up by 4.4% year-on-year (yoy), the central bank reported. The public borrowings amounted to $216.3 billion. Indonesia used to rely on IMF funding when it grappled with the Asian financial crisis in the late 1990s.

The Indonesian rupiah has also been free-falling against the dollar in recent months following the Iran war, even breaching the psychological Rp 18,000 threshold. The rupiah opened at Rp 17,725 per dollar this morning.

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