Japan threatens RI on debt

Japan threatens RI on debt

TOKYO (AFP): Japan will avoid extending fresh financial aid to Indonesia if the country seeks relief from its sovereign debt, according to a report Wednesday by Kyodo News agency.

"Japan will consider extending fresh loans only when Indonesia gives up debt relief," the senior government official was quoted as saying on condition of anonymity.

"We won't be able to do anything unless this condition is met," the official reportedly said.

Japan had already pledged US$2.78 billion in financial assistance and was considering further loans to help Indonesian President Abdurrahman Wahid rebuild the shattered economy, the news agency said.

But "it would be tantamount to a misappropriation of public funds if we lent money to a country that has decided not to pay back its debt," the official was quoted as saying.

Indonesia's sovereign debt stands at around $70 billion but Jakarta has been reluctant to seek debt relief, saying such a move would damage creditor confidence in the country.

It has instead sought a debt rescheduling for an estimated $6 billion due in the fiscal years 2000 to 2002.