RI urges ADB to minimize impact of the yen surge
RI urges ADB to minimize impact of the yen surge
JAKARTA (JP): Finance Minister Mar'ie Muhammad called on the Asian Development Bank (ADB) yesterday to minimize the impact of the yen surge on developing countries.
The minister said that the recent high appreciation of the Japanese yen has resulted in an "unexpected" increase in the debt burden borne by most developing nations.
"In this regard, I urge that any resolution concerning this take into account the interests of developing countries," he said at an annual meeting in Auckland of the Manila-based development bank.
Mar'ie, also ADB's governor for Indonesia, was one of the speakers during the second day of the three-day annual meeting, which was officially opened by the bank's president Mitsuo Sato.
In his address, a copy of which was made available here, the minister criticized the bank's currency pooling system in providing loans to its borrowers.
He acknowledged that the pooling system was created to reduce the risk of any currency fluctuation. Instead, he said, it has caused an unexpected rise in borrowings, due to the fact that a surge in any one of the pooled currencies automatically results in a total borrowings increase.
"ADB must consider how to address the problems of past loans fully or partly denominated in yen," he said.
The minister admitted that the rise in the debt servicing of the borrowing countries is not the problem of ADB but, he reminded, the bank is in a better position to hedge currency risk than individual countries.
He said he was optimistic that the Indonesian economy would continue growing despite the problem resulting from the sharp increase in the yen.
Economic growth reached more than seven percent last year. It is again projected to exceed seven percent this year, the minister explained, saying that a number of concrete measures have been taken to maintain the economic rapid growth.
Indonesia, for example, continues to mobilize private financing and privatize its major state-owned companies to partly reduce its dependence on foreign loans.
In his speech, the finance minister also called on the bank to make a stronger loan commitment to the private sector, now becoming the primary engine of growth in most developing countries.
He said better cooperation between ADB and borrowing countries is essential to create a better climate for the development of the private sector. (hen)