Why this apathy?
Reading local media reports these last few weeks does not give us any hint as to the importance of the third CGI (Consultative Group on Indonesia) meeting scheduled to begin in Paris within two days. For years, around times such as this, we have been used to being bombarded by news reports, public debates, political statements, and economic analyses, before, during and after the meeting. And little wonder. One of the most publicized purposes of the meeting is supposed to be to decide how far each creditor member will go in committing itself to supporting the Indonesian economic development program in the coming year.
This time, the mood appears unusually lukewarm. It is as if nothing of importance is happening, as if the public is not concerned, or couldn't care less about what could be going on behind those closed doors in Paris.
In fact, the meeting will play a very crucial role in the development of Indonesia's economy. Decisions made in this meeting will determine the extent of this country's economic development, because this is the forum which decides how much in external funds will be made available to finance development.
Considering the relatively low level of domestic savings and the increasingly heavy burden of servicing current debts, yearly commitments to the CGI credit line have become vital -- almost to the extent of its becoming a conditio sine qua non -- to sustaining Indonesian economic development. For the current fiscal year, not less than 36.5 percent of the total budget allotted for economic development is expected to be financed by the use of external sources -- that is, from CGI sources. This portion amounts to around US$ 5 billion.
That figure may not seem so very imposing until one realizes that within the span of the same year Indonesia will have to raise around US$ 8.4 billion to service its external debt, with its interest and loan repayments. This means that the expected new loans will merely decrease the outflow of badly needed funds from this country -- not provide any fresh inflow. Moreover, one still has to consider the high probability that this year's debt service burden will increase in proportion to the exchange rate fluctuations, especially the appreciation of yen. The World Bank estimates that almost 50 percent of the US$ 50 billion in medium and long-term public foreign debts are denominated in yen. An increase of just one percentage point in the exchange rate of the yen means an additional US$ 16 million in the debt service burden for Indonesia.
Even seen from a different angle, this third CGI meeting should be of high public interest. This fiscal year is the first year of the second long-term economic development period, which is projected to promote Indonesia into the group of industrializing countries. According to government estimates, around US$ 300 billion will be needed during this sixth five-year development period -- Repelita VI -- to reach that target. The government expects to raise only about a quarter of that from domestic and external sources. The rest must come from the private sector.
If the government cannot raise the required amount through CGI sources or other channels, the burden of the private sector will have to be increased proportionately. Otherwise Indonesia would not be able to sustain the required average annual economic growth of more than five percent. The Indonesian economy would not be able to absorb the 2.5 million people entering the workforce every year. These potential producers of goods and services would become liabilities to the country, rather than assets, both economically and politically.
That reality surely deserves public attention, public interest and public debate -- which has not seemed to be happening these last few weeks. It is indeed disheartening if all of this signals inattention on the part of the public as to what is about to go on in the coming CGI meeting. Could it be that the local media and the public are currently preoccupied with other things?