Paris Club interest delay possible, IMF says
Paris Club interest delay possible, IMF says
Berni K. Moestafa, The Jakarta Post, Jakarta
The International Monetary Fund (IMF) said on Tuesday it would
be possible for the heavily indebted Indonesia to receive
interest rescheduling on top of principal rescheduling under a
third Paris Club deal which the government hopes to secure to
ease the country's massive debt burden.
"In the past many countries have received both principal
rescheduling and interest rescheduling. If this were to be the
case for Indonesia, that would not be unusual or out of the
ordinary compared to some other countries," the IMF's senior
resident representative for Jakarta, David C.L. Nellor, told
reporters.
Last week, local newspapers reported Minister of Finance
Boediono as saying the government hoped to defer interest
payments on debts owed to creditor nations grouped under the
Paris Club.
He gave no figure in respect of the amount of principal and
interest rescheduling the government was seeking to secure from a
third Paris Club deal.
Previously, Indonesia had limited talks to deferring payments
on the principal only, which amounted to US$5.8 billion under the
second Paris Club deal hammered out in 2000.
According to Nellor, delaying interest payments was possible
providing Indonesia followed the IMF's reform program.
"If there were to be a new Paris Club arrangement, it would
also likely be the case that they would require an IMF program to
be ongoing," Nellor said.
Some economists, however, have advised the government against
seeking interest rescheduling.
Noted economist Emil Salim was quoted by Kompas daily last
week as saying that creditor countries reserved interest
rescheduling for heavily indebted poor countries only.
But with a huge overseas debt payment requirement next year --
projected at $10.9 billion -- seeking principal and interest
rescheduling seems to be unavoidable to help maintain the 2002
state budget deficit at sustainable level of around 2.5 percent
of gross domestic product.