Post-tsunami deal on debt swap signed

Post-tsunami deal on debt swap signed

Zakki P. Hakim, The Jakarta Post, Jakarta

Italy and Indonesia agreed on Wednesday to swap some of Jakarta's
debt for the reconstruction of tsunami-affected areas in northern
Sumatra and poverty alleviation programs.

Italian Foreign Minister Margherita Boniver and Indonesian
Minister of Foreign Affairs Hassan Wirayuda signed the debt-to-
development swap worth US$24.2 million and 5.7 million euros.

Under the deal, the two governments will set up a "management
committee". Indonesia will be represented on the committee by the
Office of the Coordinating Minister for the Economy, while Italy
will be represented by the Italian Embassy in Jakarta.

The joint committee will be responsible for monitoring the
transparency and accountability of the projects.

Mahendra Siregar, deputy to the coordinating minister for
international economic cooperation, said the deal would allow the
government to allocate funds to rebuild Aceh and North Sumatra,
while at the same time reducing Indonesia's foreign debt.

The two countries will later sign an agreement on which
rehabilitation projects should be prioritized.

The projects, Mahendra added, would depend on the
reconstruction blueprint for Aceh currently being drawn up by the
National Development Planning Agency (Bappenas).

The deal is a follow-up on Hassan's visit to Rome in January
to drum up post-tsunami aid.

The agreement signed on Wednesday is also based on the April
2002 Paris Club III agreement on debt swaps, as well as a
memorandum of understanding between Indonesia and Italy on debt
rescheduling signed in early December last year.

Mahendra hopes the debt swap will encourage other creditor
countries to consider similar agreements with Indonesia.

Earlier, Germany swapped a total of 48.5 million euros of
Indonesia's debt for education projects, and some 50 million
euros for environmental projects.

Jakarta is also in talks with the British government to
finalize a deal to swap some of its debt for a project that
would provide Indonesia with up to 1,000 public buses.

Only recently, the government began talks with France on
swapping some $65 million of Indonesia's debt for investments.