Japan supports RI but presses for reforms
Japan supports RI but presses for reforms
TOKYO (Reuters): Japan, Indonesia's largest creditor, will
continue to support Jakarta in the wake of recent deals with
international donors but wants the country to press ahead with
economic reforms, a government official said.
An official at Japan's Ministry of Finance (MOF) told Reuters
late on Monday that he had been encouraged by the new government
of President Megawati Sukarnoputri and its reform-minded economic
ministers.
"We will continue to support Indonesia, but we would like them
to carry out reforms properly," he said.
Although Japan may consider fresh aid to Indonesia in the
future, Tokyo will for the time being monitor talks between
Jakarta and the International Monetary Fund (IMF), the official
said.
Japan will also keep a close eye on Indonesia's progress in
implementing economic reforms, and pay special attention to a
draft budget for next year to be unveiled on Friday, he said.
Indonesia last week signed a new set of reforms with the IMF,
ending an eight-month deadlock and activating a three-year, US$5
billion economic program and debt-rescheduling deal that is
deemed vital to the country's recovery.
Once the program is officially approved, the IMF will release
a fresh $400 million loan that will pave the way for the crucial
signing of the second part of a $5.8 billion debt-rescheduling
deal with the Paris Club of official creditors.
Last Thursday, the World Bank approved loans and grants for
Indonesia totaling $448 million. Japan also approved grants of
$5.5 million for five projects -- including one aimed at
improving Indonesia's transportation system -- that will be
administrated by the World Bank.
Japan, which holds some $2.7 billion out of the $5.8 billion
package, expects talks on the rescheduling deal at the Paris Club
early next week to go smoothly, the official said, adding that
Tokyo has no problem with the deal.
With the Japanese economy on the verge of recession, and with
public debt higher than that of any other industrialized nation,
Tokyo finds itself under pressure to be cautious about using
taxpayers' money for overseas aid.
Indonesia's debt is also a sensitive issue for the Japan Bank
for International Cooperation, a semi-government institution
whose outstanding exposure to Indonesia stood at around 3.6
trillion yen ($30.34 billion) at the end of March.
As a way of reining in its mushrooming debt, the government
has said it planned to cut spending on official development
assistance (ODA) by 10 percent in the initial budget for next
fiscal year starting in April.