Whither our foreign debt?

Whither our foreign debt?

The one issue which is often mentioned in relation to foreign debt is our inability to absorb the funds optimally. This is caused by a discrepancy between planning and execution. And for this the government has to pay a US$200-million commitment fee a year.

In the case of the foreign debt of the private sector, however, the condition is quite different. In this case, the maturity date is shorter and the interest rate is higher. The private sector's total debts now account for 40 percent of Indonesia's total foreign debt of $93 billion.

Placement of funds is a crucial issue in the case of foreign debt in the private sector. If it happens to be put into a lucrative business, it is fine. But if it is not, or even worse, if the loans go bad, there are bound to be problems.

Thus far, the foreign debt has never become a national concern, thanks to prudent handling. Nevertheless, efforts to boost exports coupled with an enforcement of an austerity policy are very important. This should apply especially to the middle class people. They should not let themselves become the victims of consumerism.

-- Bisnis Indonesia, Jakarta