Indonesia's foreign loans dilemma

Before any accord was reached about the amount of assistance Indonesia would be getting from the Consultative Group on Indonesia, public demands were aired through demonstrations and press statements that the government ask the aid consortium to scrap all loans acquired during the former New Order regime. The question of whether foreign loans are needed is a classic predicament.

In relation to the current year's state budget, however, there is reason to be somewhat relieved. The fact that overseas loans are no longer posted in the state budget as revenue, as was the case in the past, reflects the government's realism. This year's state budget is no longer (misleadingly) made out to be balanced, as in the past. We have stopped fooling ourselves by admitting that a budget deficit exists.

By admitting the budget deficit, we are also putting an end to the practice of government departments squandering money at the end of the fiscal year, just to use up their budget leftovers without considering that the money was borrowed and would eventually have to be repaid.

Viewed in this context, the demands that our old debts be scrapped is irrelevant. Like the heirs of people who have died, states too must continue to meet their obligations (after any change of government). It is true that we are at present in trouble. Still, it would be a dishonor to ask for a reprieve. Not only is our dignity as a nation involved, but we are convinced that with hard work we will be able to survive.

-- Media Indonesia, Jakarta