RI expects DM 50 million in debt-for-nature swap

Tertiani ZB Simanjuntak, The Jakarta Post, Jakarta

The government is expecting to receive a 50 percent reduction of the Dm 50 million that it owes Germany if a planned debt-for- nature-and-sustainable-development-swap is agreed to by the creditor nation in January 2002, an official said on Monday.

Director general for forestry protection and nature conservation at the Ministry of Forestry, Wahjudi Wardojo, said that the government was still waiting for approval from the creditor on the swapping scheme to conserve five national parks.

Two of the national parks are located in Sumatra, two are in West Java and East Java respectively and the other is on the island of Lombok, he said.

He explained that in a proposal submitted by the Coordinating Ministry for the Economy last October, the government had negotiated the writing off of the Dm 25 million in exchange for Indonesia financing the conservation of the national parks.

"We have not yet heard from our counterpart. But we expect that the scheme would be able to take place in January," he said at his office, adding that both countries had a similar fiscal year that starts in the first month of each year.

Wahjudi said that in the negotiations, Germany had required assurances that the government could control the scheme and that the current amount of financing to the national parks was similar to the amount the scheme had given.

Therefore, the government is waiting for commitment from the Ministry of Finance and the National Development Planning Agency (Bappenas) to increase the funding from the current $1 million to $5 million for each national park.

DNDS is a scheme intended to reduce the country's foreign debt by swapping it for the commitment to use its domestic financial resources for conservation activities.

The scheme is favored by Jakarta to lighten its heavy debt burden, which forces the government to allocate more of its budget for debt repayments than for development.

In the 2002 budget, Indonesia has to reimburse up to Rp 130 trillion ($13 billion), or some 44 percent of total revenues, while development spending gets only Rp 47.1 trillion, or only about 2.8 percent of the estimated gross domestic product (GDP).

The government also has to gradually pay back its Rp 656.7 trillion in domestic debts, which should be settled in 2018 and another $1.3 billion this year to pay the loan from the International Monetary Fund (IMF)'s economic recovery programs.