Sat, 16 Sep 2000

RI looks for $4.8b loans from CGI donors

JAKARTA (JP): Indonesia is seeking some US$4.8 billion in loans from its traditional international donors grouped under the Consultative Group on Indonesia (CGI) to help finance the budget deficit in 2001, according to Coordinating Minister for the Economy Rizal Ramli.

Rizal said the amount included a carry-over from the unused portion of the $4.7 billion pledged by the donors last year.

Speaking to reporters after a meeting with Jakarta representatives of the CGI members, Rizal said that although no specific figure was discussed, the donors seemed to be "supportive" of the government's economic reform programs, including the plan to develop small- and medium-size enterprises and infrastructure in rural areas.

"In general, the meeting was very productive and almost all participants showed strong support for Indonesia's economic recovery process," he said.

The upcoming CGI meeting will be held in Tokyo on Oct. 17.

The 2001 state budget is forecast to have a deficit of some Rp 53 trillion ($6.24 billion).

The government will use the CGI loan, in addition to proceeds from the privatization program and from the sale of assets under the Indonesian Bank Restructuring Agency (IBRA), to finance the budget deficit.

"The donors have expressed their support to ensure that the CGI meeting will be successful," Rizal said.

He admitted, however, that the donor representatives had expressed some concern, including over the recent killing of United Nations humanitarian workers in Atambua, West Timor.

Rizal said he had assured the donors that the government would investigate the case and take legal action against those responsible for the incident.

He added that the donors also questioned the problems Indonesia might face when implementing the regional autonomy and fiscal decentralization policies early next year.

He said the concerns included the impact of the new state budget policy and a fear that regional government would rush to issue bonds to finance their development program which would create a fiscal problem.

Rizal assured the donors that the central government would only allow the bond issuance once the institution and ruling had been established.

"The most important thing is that we fully realize that the benefit of the decentralization policy will be felt in the medium-term, and, of course, in the short-term there will be some problems ... but we will resolve this to ensure a smooth transitional process," he said.(rei)