RI, Argentina are different: Minister

The Jakarta Post, Jakarta

Indonesia will not face a similar fate to Argentina because it is facing different economic difficulties and is taking different solutions to deal with its problems, economic minister Dorodjatun Kuntjoro-Jakti announced, following a Cabinet meeting on Thursday.

"In the Cabinet meeting we specifically reported on the difference between Indonesia and what is being faced by Argentina," Coordinating Minister for the Economy Dorodjatun said.

He said Argentina, with a population of just 37 million, had a foreign public debt of some US$130 billion while Indonesia, with a 210-million-strong population had some $70 billion in public debt.

While both are heavily indebted countries, they have different debt structures, he added.

The bulk of Argentina's debt, some 95 percent, was obligatory and largely privately syndicated, unlike Indonesia's debt, which comes from international loans.

With the Argentine currency pegged to the dollar, its export competitiveness will suffer greatly because of the dollar's appreciation, while Indonesia had, on the contrary, benefited from greater competitiveness and a larger variety of products, Dorodjatun said.

"So we are very different from Argentina," Dorodjatun said.

Dorodjatun reaffirmed the government's commitment to honor its obligation to repay its huge debt and would not follow Argentina's move to halt payments of its debt.

"Our commitment is that we will honor all our foreign debt payment obligations. We will not halt our debt payment," he said.

The new Argentinean administration declared on Sunday that it was halting payments on its public debt, which stand at $132 billion, the biggest default in history.

Argentina's economic turmoil started when the International Monetary Fund (IMF) decided last week to suspend a stimulus package intended to bail out the country's already evaporating economy.

The failure of Argentina to meet the required target of zero deficit was the reason behind the fund's decision to suspend its $1.3 billion in loans.