Third World debts 'must be ommitted'
Third World debts 'must be ommitted'
Tantri Yuliandini, The Jakarta Post, Nusa Dua, Bali
Non-governmental organizations (NGOs) called for an abolition of the debts of developing countries, particularly South Africa and Indonesia, arguing that most of the debts were accumulated during oppressive regimes.
Raja Siregar, coordinator for the Anti-debt Coalition in Indonesia, said on Wednesday that Indonesia's odious debts originated from 32 years of irresponsible borrowing by the Soeharto' New Order regime, and was mainly used to halt the process of democracy.
As for South Africa, the amount of debts mounted when the apartheid government took control of the country. The money was used to support its suppressive policies, said Glenn Farred of Jubilee South Africa.
"If apartheid is a crime against humanity, then the loan given to the apartheid government was a serious crime," he argued.
It is the same case with Indonesia, he added. It was irresponsible to provide money to a corrupt regime. "And asking the next generations to pay off the odious debts was immoral," he said.
Indonesia's total domestic and external public debt -- amounting to US$130 billion -- almost equals its gross domestic product (GDP), Raja said, explaining that this means most of the country's income was used for debt servicing.
The impact of the debt burden on Indonesia was the drop in development budget and social spending. In 2001 for example, the government spent only 17.5 percent of its budget for development while allocating a hefty 35 percent for principal and interest payment, he said.
"The shrinking development budget only allows Indonesia to allocate 8.5 percent for education and 2 percent for health," Raja said.
Raja and Farred argued that the money loaned to developing countries was used by creditors as a tool to take control of those countries.
Indonesia, for example, had sought rescheduling through the Paris Club to ease the payment of its external debt on conditions set by the International Monetary Fund (IMF), Raja said.
"As a result, Indonesia is bound to implement all IMF's requirements obliging it to cut subsidies and privatize all state assets including utilities such as water, energy and electricity," he said.
Furthermore, Farred said that creditor countries repatriated $1.3 for every dollar loaned in the name of aid.
"People are making money out of developing countries' debts ... It's a new form of slavery," he said, explaining that creditors have the power to write off or enforce debts and therefore ultimately control the politics and economies of debtor countries.
"When they (creditors) want something from a country, they could easily write off the debt of that country, just like the United States did with Pakistan in return for a military base," Farred further said.
Jubilee South Africa together with Indonesia's Anti-debt Coalition and the Indonesian People's Forum (IPF), called on developing countries not to repay their odious debts.
Raja said that Indonesia's reason for continuing payment for odious debts was its fear that the country's investment rating by international rating agencies such as Standard and Poor's (S&P) and Moody's would drop, which in turn would cause foreign investors to shy away from the country.