Provinces told to resist foreign loans

Provinces told to resist foreign loans

JAKARTA (JP): Minister of Home Affairs and Regional Autonomy
Surjadi Soedirdja told provincial administrations on Saturday to
refrain from attaining loans from abroad over the next two years
although it is permissible under regional autonomy.

Surjadi claimed that donor countries themselves had appealed
for local administrations not submit requests for loans.

"There is a strong push from donor countries for regions not
to take loans from abroad in the next one or two years," Surjadi
was quoted by Antara as saying in Surabaya on Saturday.

Citing government regulation No. 107/2000, Law No. 22/1999 on
regional administrations and Law No. 25/1999 on the fiscal
balance between the regions and the central government, Surjadi
said such loans also must be approved by the central government.

"The donor countries wanted it like that because they will not
sign a deal with regional administrations, only the central
government," he said, without identifying the specific donor
states that had demanded this arrangement.

Surjadi also cautioned regional administrations that in the
future any applications for foreign loans must be based on clear
calculations in which the money received would be used for
projects that would see a return on investment or would clearly
benefit the welfare of the people.

He added that the central government also would scrutinize the
applications to ensure it would not eventually be burdened with
the debt.

Minister of Finance Prijadi Praptosuhardjo also urged regional
administrations not to be hasty in seeking foreign loans to fill
their coffers, adding that the prohibition on borrowing from
abroad also was based on the situation of the country, which is
still very much in a state of crisis.

"Regions should really take into account their cash flow so
(foreign loans) do not eventually impede local development," he
said.

According to Prijadi, a ministerial decree is currently being
drafted by his office to regulate the technical process of
attaining foreign loans. (mds)