Mon, 15 Aug 1994

RI set to assist in debt management

JAKARTA (JP): Coordinating Minister of Economy and Finance Saleh Afiff said here yesterday that Indonesia is ready to provide technical assistance to help the least developed countries (LDCs) manage their debts.

"We are ready to provide technical assistance especially in helping the debt-ridden countries negotiate with their creditors," he told the press following the closing of the second-day session of the ministerial meeting of the Non-Aligned Movement (NAM).

Afiff said that the recommendations prepared by the NAM's advisory group of experts on external debt, which included the proposal to cut debts of LDCs by 70 percent and a change in the international debt policy, was welcomed in the meeting. It was attended by representatives of the NAM's 31 least developed members.

The minister, who presided over the meeting yesterday, said that a number of participants had asked President Soeharto in his capacity as NAM chairman to submit the recommendation to creditors.

Some others had requested the NAM chairman seek a possible cooperation in debt management, he said.

"But if the question is whether Indonesia would also provide financial assistance. The answer is clear... we don't want to take over their debt problem," he said when asked about the assistance Indonesia could give in solving the debt crisis of the poorer nations.

Indonesia, which has foreign loans of around US$90 billion, has been widely recognized for its success in managing its huge debts.

Meanwhile Dennis de Tray, a representative of the World Bank in Jakarta, said that creditors -- especially multilateral financial agencies -- would face difficulties in discussing the proposal of the NAM's advisory group to cut the debt of least developed nations by 70 percent.

He said the World Bank, for example, should consult its shareholders on how to response the debt reduction proposal.

Larger role

On Saturday Afiff called on international financial institutions to play a larger role in solving the debt crisis of least developed countries.

Speaking at the opening of the meeting, Afiff said that the involvement of the financial agencies is an important factor in the efforts to find a more comprehensive way of solving the debt problem.

"The reduction of multilateral debt is indeed urgent," said Afiff.

According to a report by the NAM's ad hoc advisory group on debt, there were at least 58 heavily debt-ridden countries, of which 32 were classified as least developed.

The total long-term debt of these countries reached US$247.6 billion in 1992, 26 percent of which was owed to multilateral financial institutions, 49 percent to governments and their agencies and 24 percent to the private creditors.

Speakers at the meeting included President Soeharto's team of experts comprising of Widjojo Nitisastro, Mohammad Sadli, Ali Wardhana, Radius Prawiro, Suhadi Mangkusuwondo and Emil Salim.

Widjojo, who gained much praise for his active role in the restructuring and rescheduling of Indonesia's foreign debt in 1970s, told the meeting that the rescheduling of debt is no longer efficient or sufficient for the nations with heaviest debt burden as the strategy would hamper the revival of their economy.(hen)