Nine states offered debt relief

Nine states offered debt relief

Agencies, Jakarta

Wealthy creditor nations have offered to let nine tsunami-hit
countries halt repayments on billions of dollars of debt, but
only three said they planned to accept the Paris Club's proposal.

Jean-Pierre Jouyet, chairman of the Paris Club of creditor
nations, said in Paris that countries directly affected by the
Dec. 26 Indian Ocean earthquake and tsunami could halt debt
repayments if they wanted to.

The moratorium could last up to a year, depending on
assessments by the International Monetary Fund. It will "allow
these countries to dedicate all available resources to address
humanitarian and reconstruction needs," Jouyet was quoted by AP
on Wednesday.

Only Sri Lanka, Indonesia and the Seychelles have expressed
interest so far. Some countries have suggested that a debt
moratorium is not the most appropriate response to the disaster.

Indonesia, while signaling that it plans to take up the offer,
has said cash would be more useful. The country would be the
biggest beneficiary of the moratorium, saving US$3 billion in
debt repayments due this year, Jouyet said.

"We will continue to have discussions on this offer of a debt
moratorium," Indonesian Foreign Minister Hassan Wirayuda was
quoted by AFP in Berlin after talks with German counterpart
Joschka Fischer.

"They want grants," German Finance Minister Hans Eichel said.
"Indonesian creditworthiness in capital markets shouldn't be
damaged under any circumstances."

The most indebted of the affected countries, Indonesia was
also hardest hit by the earthquake and tsunami with more than
110,000 people killed.

In Jakarta, the government says it will carefully consider the
offer from the creditor nations.

"If the offer does not fit our policies, we will not submit
any request for a debt moratorium," Minister for Finance Yusuf
Anwar said on Thursday.

"The assessment will take up to three months before the Paris
Club considers further policies based on each country's situation
and request."

Coordinating Minister for the Economy Aburizal Bakrie said the
government would not be hasty in accepting the debt moratorium
offer, although its immediate $350 million relief during the
three-month assessment period would certainly ease the debt
burden on the state budget.

"We can ask for a moratorium of up to five years but only if
we join the IMF program, which we don't want to do," he said.

The previous government terminated all IMF programs last year
although the country is still under a post-program monitoring
scheme following public pressure.

The central bank's foreign affairs director, Kusumaningtuti,
said Indonesia could have received debt relief of nearly $5
billion if the government could convince the Paris Club that the
country was highly indebted due to the tsunami.

The Paris Club's Naples Terms, she said, stipulates that a
debt reduction can reach up to 67 percent of the total non-
official development foreign debt in the form of non-official
development assistance (ODA).

She added that Indonesia could also request debt cancellation
of up to $218.5 million from various projects in Aceh and North
Sumatra which were financed by foreign loans.

"The projects are now devastated and rendered useless by the
disaster, so it is only appropriate that repayment of the loans
are canceled," she said.

Kusumaningtuti suggested that the government intensify the
implementation of debt swap schemes with creditor countries,
which could see debt relief of up to $818 million, particularly
with Indonesia's major creditor Japan. Japan has contributed 35
percent of the country's outstanding foreign debt of $79 billion.