RI seeks bilateral talks with U.S. to settle debt

JAKARTA (JP): Indonesia is seeking bilateral talks with the United States government to help solve the country's private- sector debt problem with American creditors, Indonesian ambassador to the U.S. Dorodjatun Kuntjorodjakti said on Monday.

Dorodjatun said that although the U.S. ranked only third in terms of the amount of commercial loans provided to the country, any debt solution with American creditors would be crucial for Indonesia to reach a comprehensive settlement to its commercial overseas debt.

"We believe what the U.S. starts will be followed (by other countries)," Dorodjatun told reporters at the Bina Graha presidential office after a meeting with President Abdurrahman Wahid.

Dorodjatun said Indonesia had US$80 billion in private-sector external debts, with Japan and Europe being the largest and second largest creditors.

Dorodjatun said he expected bilateral talks could be held by end of January next year.

He envisages the bilateral talks would be held by two senior state officials from both countries. Two fully trusted by Indonesian debtors and two by American debtors.

"The two officials, acting like arbiters, will negotiate in a room, maybe for hours, to reach a final and binding solution," Dorodjatun said.

He said he had talked with the President and Vice President Megawati Soekarnoputri, almost all ministers and the private sector about the plan.

"This is exactly what Gus Dur wants," Dorodjatun said, referring to the President by his nickname.

Indonesia reached an agreement with European creditors to settle the country's commercial debt in a meeting in Frankfurt in June 1998.

Following the agreement, the government set up the Indonesian Debt Restructuring Agency (INDRA) in August 1998 to facilitate payment of the country's private sector external debts.

Under the program, debtors joining the scheme must first seek approval from their lenders to reschedule the debts over eight years, including a three-year grace period.

Debtors then make monthly installments in rupiah, based on an INDRA-set conversion rate and INDRA pays the lenders in dollars. Payment only covers interest during the grace period.

Dorodjatun also said national flag carrier PT Garuda Indonesia was seeking to lease more aircraft.

He said Garuda remains entitled to further aircraft financing from the U.S. Export-Import Bank even after borrowings of some $2.9 billion.

The ambassador quoted Garuda president director Abdul Gani as saying the airline requires more planes to meet increasing demand, with Garuda's current load factor at 87 percent. (jsk/prb)