RI seeks more aid in Bali talks

RI seeks more aid in Bali talks

Berni K. Moestafa and A'an Suryana, The Jakarta Post, Nusa Dua, Bali

Debt payments amounting to 40 percent of the state budget and a
chronic budget deficit has driven Indonesia to seek more
financial aid and new debt payment options from developed
countries at the United Nations meeting in Bali on sustainable
development.

A member of the Indonesian delegation, Djumala Darmansjah,
said developing countries were seeking to include loan and debt
payment proposals into the action plan, which delegates were
negotiating on.

He said one suggestion was to include some US$30 billion in
funds developed countries had promised during a meeting on
poverty in Monterey, Mexico, into the action plan.

"Indonesia is actively pursuing its interests during the
talks. It was, after all, our proposal to get the Monterey fund
into the negotiations," Djumala said on Wednesday.

The country has much to gain from the talks. Debts totaling
$130 billion have undermined efforts to create employment, cut
poverty or, for that matter, promote sustainable development.

Domestic debt payments outweigh spending on development, of
which only a portion is allocated for social welfare programs.
While spending has been kept to a minimum, the state budget
remains in a deficit, forcing the government to rely on foreign
aid to cover the shortfall.

The U.S. and the European Union agreed at a meeting on poverty
in Monterey early this year to set aside $30 billion in aid to
help reduce poverty worldwide.

Djumala said the means to channel the funds had not been drawn
up yet, allowing it to be integrated into the Chairman's Text now
under negotiation.

Delegates from around the world have gathered in Bali for the
fourth preparatory committee meeting that leads up to the World
Summit on Sustainable Development in Johannesburg, South Africa
in August and September.

The summit is aiming to hammer out a more concrete action plan
after the first one agreed at the 1992 summit in Rio de Janeiro,
Brazil, failed to produce the desired results.

Delegates in Bali expect to finalize negotiations of the
Chairman's Text, which is the action plan for world leaders to
sign in Johannesburg, South Africa.

Chapter IX of the Chairman's Text will draw the most heated
debates, as it outlines the means and implementation of the
action plan.

Falling under chapter IX are the issues of loans to finance
sustainable development programs, and Djumala said it was obvious
that developed countries were defensive on this issue.

"It's their money and they just don't accept other countries
telling them how to spend it," he said.

But he added that developed countries could back down on their
stance later on during the committee of the whole meeting, where
different working groups get together to iron out the final
issues.

He said Indonesia along with other developing countries also
proposed to utilize the International Monetary Fund's (IMF) loans
to finance sustainable development programs.

Also called the Special Drawing Rights, the IMF loans cover
only a country's balance of payment in cases of a liquidity
crisis. Indonesia has been under the IMF's auspices since the
country was hit by the 1997 economic crisis.

Other suggestions under negotiation in the Chairman's Text are
to loosen financial aid to the least developed countries and
promote the use of aid to boost development.

One suggestion accepted by all is the call for action to meet
developed countries' targets of allocating 0.7 percent of their
gross domestic product (GDP) to overseas development assistance.

Indonesian Delegation head Makarim Wibisono said
implementation of the Monterey pledge would bring overseas
development assistance closer to its target. At present, he said,
the average overseas development assistance stands at 0.39
percent of GDP.

To help cut the debt burden carried by developing countries,
they proposed several debt solutions, Djumala said.

These include debt-swapping payments with sustainable
development programs or a debt-to-nature swap that would, for
instance, protect forest areas from timber companies.

Preliminary talks of a debt-to-nature swap are under way on a
bilateral basis, such as with Germany. However, the amount has
been relatively small.

So far the only debt relief has come from the rescheduling of
Indonesia's foreign debts under the Paris Club group of
creditors.

Some NGOs have called for more drastic measures, such as
demanding debt reduction. The government, however, is unlikely to
entertain such demands, reasoning that the mere mention of a
default would condemn Indonesia to isolation from the
international finance community.