WB, Australia to review Indonesian debt
WB, Australia to review Indonesian debt
CANBERRA (Reuters): Australia said on Tuesday it was undertaking a joint study with the World Bank of the make up and management of Indonesia's foreign debt to see whether the international community could ease the massive burden.
"We and the World Bank... are now going to put together a joint study on the structure of that debt and whether anything can be done about it internationally," Australian Foreign Minister Alexander Downer told reporters.
He said the joint study was agreed upon during a visit to Australia last week by World Bank President James Wolfensohn.
"That's on a no-commitments basis. We have no idea what could be done about it, but we need to understand the structure of Indonesian foreign debt because (it is) a big problem for Indonesia as they struggle to get out of the economic crisis that has engulfed the country off and on since 1997," Downer added.
The Washington-based World Bank is one of Indonesia's largest creditors, along with the International Monetary Fund and Paris Club of creditors.
Downer said the study would investigate how much in loans was pilfered by corrupt officials and see whether adjustments to payment schedules -- over and above that already agreed to by the Paris Club -- can ease the burden on Indonesia's new President Megawati Soekarnoputri.
Australian Prime Minister John Howard is scheduled to go to Jakarta on August 12-13 to meet Megawati, who replaced former president Abdurrahman Wahid last month after Wahid was ousted from power for incompetence after a chaotic 21-month rule.
Aid agencies and some creditors have said the international lenders should consider forgiving some of Indonesia's $30 billion aid debt, a third of which the World Bank has said was stolen by the regime of former president Suharto.
An agreement by the official Paris Club in April last year to reschedule $5.8 billion of Indonesia's debt is contingent on an active IMF program.
The IMF froze a $400 million tranche of its $5 billion loan program to Indonesia in December because of failed economic reforms. A resolution to the impasse would pave the way for rescheduling billions of dollars of debt with the Paris Club.
"When we know more about the structure of it, we'll know if there is anything that can be done about it over and above what's already been done through the Paris Club," Downer said.
"There is some argument about the debts that were run up by President Suharto in his time and the nature of those debts and the servicing of those loans and the consequences for the Indonesian government," he added.
The World Bank in June approved new loans of $422 million for Indonesia and said it could increase lending to as much as $1 billion annually if the impasse with the IMF over the slow pace of economic reforms in Indonesia could be resolved.
An Indonesian senior government official said on Monday that a team from the IMF is slated to meet Indonesia's new government later this month to discuss the country's progress in meeting economic reform targets.
The IMF team will hold talks with the new economic ministers, and are also likely to meet Megawati, said Dipo Alam, assistant to the coordinating minister for the economy.
"I think they will arrive here sometime in mid-August," he said, adding that IMF Asia Pacific deputy director Anoop Singh would be leading the team again.
An IMF team left Jakarta last month with only a draft of the Letter of Intent (LoI) containing the new reform targets.
The fund suspended the $400 million loan to Indonesia in December last year after the country backpedaled on a number of LoI targets.