Mar'ie seeks debt reduction
Mar'ie seeks debt reduction
JAKARTA (JP): Minister of Finance Mar'ie Muhammad has called
on multilateral lending institutions to slash the debt
obligations of the world's poorest countries and restructure
themselves to serve the changing world economy.
Speaking at the 1995 joint annual International Monetary Fund-
World Bank meeting in Washington on Tuesday, Mar'ie said that
despite the rapid changes in the world economy, overall changes
on the part of the multilateral organizations have been slow.
"The changes in the world economy demand that we rethink the
role of the international institutions and reshape them to serve
our future needs," Mar'ie said in his speech, a copy of which was
made available here yesterday.
Mar'ie said the ultimate goal of the reform proposed is to
renew the significance and contribution of the multilateral
lending institutions to growth, equity and stability in a newly-
globalized world economy.
The reformed institutions, however, should not compete with
the private sector. "We do not need multilateral organizations to
do what private institutions can do perfectly well," Mar'ie said.
He also expressed appreciation for the initiative of the
president of the World Bank, James Wolfensohn, in setting up a
separate fund for the purpose of multilateral debt-reduction.
"Up to recently, the very idea of multilateral debt reduction
was considered by some circles as unnecessary and irrelevant.
Even the existence of a multilateral debt problem was
questioned," Mar'ie said.
Debt burden
Mar'ie said that Indonesia, as chairman of the Non-Aligned
Movement, wants the multilateral creditors to pay closer
attention to the debt burdens and debt overhang of many
developing countries, in particular the poorest countries, which
are far from being resolved.
In his speech to participants in the World Economic Forum in
Singapore last month, President Soeharto criticized multilateral
creditors as being unwilling to even discuss the possibility of
debt reduction.
Soeharto urged multilateral creditors to slash debt
obligations of the world's poorest countries, as had been done by
bilateral and commercial creditors.
What is required from the multilateral institutions now is not
further debt rescheduling but a once-and-for-all debt settlement,
through meaningful reduction of all categories of debts, Mar'ie
said yesterday.
He said that for many poor countries the servicing of
multilateral debts has become the bulk of debt service payments.
At present it is impossible for debtor countries to have their
debts rescheduled, let alone see a reduction in their
multilateral debts.
"As a matter of fact, many poor debt-distressed countries are
able to service their multilateral debts because they do not
service their bilateral debts fully," Mar'ie said. "As a
consequence, while they service their multilateral debts, at the
same time they are forced to accumulate large and growing arrears
on their bilateral debts."
He asserted that debt reduction by multilateral institutions
will not jeopardize their credit rating. The multilateral
financial institutions are not only financially strong, but their
reputation in international markets depends on capital guarantees
from their members, particularly major developed countries.
Quoting the Communique of the G-7 Summit in Halifax, Canada,
on June 15-17, Mar'ie said the G-7 countries have recognized the
existence of a substantial multilateral debt problem and have
asked the Bretton Woods Institutions to find a solution to the
problem.
"Thus, the G-7, the Non-Aligned Movement, other members of the
World Bank and the Fund, the Non-Governmental Organizations and
the rest of the international community are emphasizing the
urgency to arrive at effective solutions to the debt problems of
the poorest countries," Mar'ie said. (rid)
IMF -- Page 9
JAKARTA (JP): Minister of Finance Mar'ie Muhammad has called
on multilateral lending institutions to slash the debt
obligations of the world's poorest countries and restructure
themselves to serve the changing world economy.
Speaking at the 1995 joint annual International Monetary Fund-
World Bank meeting in Washington on Tuesday, Mar'ie said that
despite the rapid changes in the world economy, overall changes
on the part of the multilateral organizations have been slow.
"The changes in the world economy demand that we rethink the
role of the international institutions and reshape them to serve
our future needs," Mar'ie said in his speech, a copy of which was
made available here yesterday.
Mar'ie said the ultimate goal of the reform proposed is to
renew the significance and contribution of the multilateral
lending institutions to growth, equity and stability in a newly-
globalized world economy.
The reformed institutions, however, should not compete with
the private sector. "We do not need multilateral organizations to
do what private institutions can do perfectly well," Mar'ie said.
He also expressed appreciation for the initiative of the
president of the World Bank, James Wolfensohn, in setting up a
separate fund for the purpose of multilateral debt-reduction.
"Up to recently, the very idea of multilateral debt reduction
was considered by some circles as unnecessary and irrelevant.
Even the existence of a multilateral debt problem was
questioned," Mar'ie said.
Debt burden
Mar'ie said that Indonesia, as chairman of the Non-Aligned
Movement, wants the multilateral creditors to pay closer
attention to the debt burdens and debt overhang of many
developing countries, in particular the poorest countries, which
are far from being resolved.
In his speech to participants in the World Economic Forum in
Singapore last month, President Soeharto criticized multilateral
creditors as being unwilling to even discuss the possibility of
debt reduction.
Soeharto urged multilateral creditors to slash debt
obligations of the world's poorest countries, as had been done by
bilateral and commercial creditors.
What is required from the multilateral institutions now is not
further debt rescheduling but a once-and-for-all debt settlement,
through meaningful reduction of all categories of debts, Mar'ie
said yesterday.
He said that for many poor countries the servicing of
multilateral debts has become the bulk of debt service payments.
At present it is impossible for debtor countries to have their
debts rescheduled, let alone see a reduction in their
multilateral debts.
"As a matter of fact, many poor debt-distressed countries are
able to service their multilateral debts because they do not
service their bilateral debts fully," Mar'ie said. "As a
consequence, while they service their multilateral debts, at the
same time they are forced to accumulate large and growing arrears
on their bilateral debts."
He asserted that debt reduction by multilateral institutions
will not jeopardize their credit rating. The multilateral
financial institutions are not only financially strong, but their
reputation in international markets depends on capital guarantees
from their members, particularly major developed countries.
Quoting the Communique of the G-7 Summit in Halifax, Canada,
on June 15-17, Mar'ie said the G-7 countries have recognized the
existence of a substantial multilateral debt problem and have
asked the Bretton Woods Institutions to find a solution to the
problem.
"Thus, the G-7, the Non-Aligned Movement, other members of the
World Bank and the Fund, the Non-Governmental Organizations and
the rest of the international community are emphasizing the
urgency to arrive at effective solutions to the debt problems of
the poorest countries," Mar'ie said. (rid)
IMF -- Page 9