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.