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)