Paris Club likely to OK debt delay deal
Paris Club likely to OK debt delay deal
Agencies, Paris, Jakarta
The Paris Club of creditor states would agree on Wednesday on a
debt moratorium for countries hit by Asia's tsunami, French
Finance Minister Herve Gaymard said.
"We will approve this decision this morning in Paris," Gaymard
told Radio France Internationale early on Wednesday, making clear
the way to a deal had been paved by the Group of Seven (G-7) rich
countries agreeing on a debt moratorium last Friday.
Gaymard said he expected Indonesia, Sri Lanka and the
Seychelles to accept the Paris Club deal.
By early afternoon in Paris, no deal had been announced but a
news conference was scheduled for 6 p.m. GMT (1 a.m. Jakarta
time).
Indonesian Foreign Minister Hassan Wirayuda said he saw
support growing at the Club for granting Jakarta a one-year debt
moratorium to help it cope with the disaster.
"As of now, some countries have mentioned they would allow
debt (servicing) payments to be postponed one year," he told
Reuters in an interview. "I think they will reach a consensus on
debt relief."
Hassan said on Tuesday that in addition to a debt freeze
Indonesia also needed more donations to cope with the disaster.
Australian Prime Minister John Howard said last week he would
consider any debt proposal but feared any move to forgive debt or
freeze repayments would not help those most in need.
Australia is one of the Paris Club's 19 permanent members, but
the group's decisions on debt relief are taken by consensus
rather than unanimity.
Gaymard said he told Paris Club officials, who were meeting at
the French Finance Ministry, that the G-7 nations -- France, the
United States, Japan, Germany, Britain, Italy and Canada --
believed a debt moratorium was vital.
The G-7 countries are all in the Paris Club.
"It appears to members of the G-7 ... that a moratorium is
absolutely indispensable in order to allow the affected countries
to overcome their immense difficulties," he said. "That is the
clear and simple message that brought to the heads of the
delegations meeting here."
In Jakarta, local economists grouped under the banner of
Indonesia Bangkit (Indonesia Awakens) said earlier that the
Indonesian government should have asked for a five-year Rp 100
trillion (US$10.78 billion) debt relief from creditor nations
instead of a two-year Rp 30 trillion moratorium.
The Rp 30 trillion amount represents one third of Indonesia's
$8.8 billion in scheduled repayments over the next two years to
creditor nations.
"This reflects the weakness in strategy and policy of the
government's economic team, failing to take advantage of this
momentum," Hendri Saparini, an economist with Econit, told a
press conference.
She said that offers of debt moratoria are very rare, and
Indonesia has missed an opportunity to secure the best possible
deal and to ease pressure on the annual state budget.
Stronger words came from senior economist Sri Edi Swasono, who
suggested that a write-off would have been better than a debt
moratorium for highly-indebted countries such as Indonesia.
At least 106,500 people in Aceh and North Sumatra were killed
when a earthquake and tsunami hit both provinces on Dec. 26.