GOVERNMENT EXPECTED TO IMPROVE ITS DEBT MANAGEMENT

By Andi Abdussalam

Jakarta, April 7 (Antara) - Media reports cited that the government's debt until the end of February 2018 reached Rp4,034.8 trillion, and if the private sector's debt was taken into account, the figure amounted to Rp7 thousand trillion.          Quoting data from the Institute for Development of Economics and Finance (Indef), Deputy Chairman of the People's Consultative Assembly Hidayat Nur Wahid remarked that the country had debt reaching some Rp7 thousand trillion, including the private sector's debt.          Wahid believes that the increase in debts was not proportional with the improvement in the people's welfare.          "The question asked is what has the debt been used for? Debt has continued to increase, but there is no improvement in the people's welfare. The government has to evaluate this," Wahid noted in the district of Padang Pariaman, West Sumatra, on Sunday (Mar 25).          Hence, Enny Sri Hartati, the executive director of Indef, has called on the government to improve its debt management to reinforce its economic productivity.

GOVERNMENT USES DEBTS PRUDENTLY

  

By Andi Abdussalam           Jakarta, March 30 (Antara) - If compared with that in 1998, which reached US$130 billion, the government's external debt now is far larger, as it accounts for $357.5 billion.          Yet, the government claimed it is manageable and productive, as the country's foreign exchange reserves (forex) in 1998 were only $20 billion, or about 15 percent of the debt, while in 2018 the amount of the forex reached $131 billion, or almost 35 percent of the external debt.          Indonesia's gross domestic product in 2018 reached almost $1 trillion, while its debts only accounts for 35 percent of the GDP, which is still below the tolerance 60 percent, limit based on the country's financial law. Indonesia shares the same level as those of Brazil and Thailand, but is far worse than those of the United States, which reaches 106 percent, and Japan at 250 percent.         However, seeing the large amount of the government's external debts,  Deputy chairman of the People's Consultative Assembly (MPR) Hidayat Nur Wahid has asked the government  to evaluate the use of its debts.

EXTERNAL DEBTS USED TO BUILD INFRASTRUCTURE

by Andi Abdussalam

Jakarta, July 21 (Antara) - Indonesia's rising foreign debts should not be a cause for concern as far as they are managed well and are used for developing infrastructures which will help boost the country's economic growth.         Indonesia's foreign debts rose 5.5 percent to US$333.6 billion year-on-year as of May 2017 following an 11.8 percent rise in public debts to US$168.4 billion, according to Indonesia's central bank (Bank Indonesia/BI).        "As long as the government is carrying out budget expansion for infrastructure development and its debt ratio is not too high, we will remain sustainable," Chief Economic Minister Darmin Nasution told Commission XI on financial affairs of the House of Representatives (DPR) Monday last.          Finance Minister Sri Mulyani also described Indonesia's debts as still within the safety condition where in 2016 Indonesia's external debt ratio position was 28 percent of its Gross Domestic Product (GDP) or about Rp3,466 trillion (some $258.9 billion based on the conversion rate of Rp13,387/$1).          "The Indonesian debt ratio is relatively lower than those of other G20 countries ASEAN member nations," Mulyani told a plenary session on the implementation of 2016 state budget at the Parliament Tuesday (July 18).

INDONESIA'S DEBT RATIO DECLINING

By Andi Abdussalam

Jakarta, June 16 (ANTARA) - Although Indonesia's external debts have increased from Rp1,275 trillion in 2004 to Rp1,667 trillion in 2009, their ratio against the country's gross domestic product (GDP) had declined from 57 percent to 32 percent.

        "Indonesia's debt ratio against its gross domestic product has in the past five years continued to decline, even lower than those of advanced states, because its GDP is also increasing," Finance Minister Sri Mulyani said.

        In 2008 the debt ratio of Indonesia against its GDP was 32 percent while that of Japan was 200 percent. In the meantime, according to the minister, the United States' debt ratio against its GDP was 81.2 percent and Britain 61 percent. This means that the ratio of debts of the advanced countries is big and their debt ratios against their GDP were also big.

        "But the local non-governmental organizations do not kick a fuss over the Japanese debts, while their counterparts in Indonesia, though its debt ratio is small, always raised anger and criticism," the minister questioned.

        In addition, the ratio of Indonesia's debt interest against its revenues and expenditures is also small, namely between 9.8 and 10 percent.

        Until March 31, 2009) Indonesia's debts which have fallen due amounted to Rp64 trillion in foreign loans and Rp30 trillion in promissory notes.

        The minister explained matters about the government debts in response to the many criticism and discourses among non-governmental organizations (NGO) and observers on Indonesia's debts. This linked with the on-going presidential campaigns. The country's debts issue is always taken up as a theme of a campaign to evaluate the government's performance.

        "Although the government has managed its debts well, I think people will continue to criticize it," the minister said in a press conference on Sunday.

        She said that as long as the criticism was based on complete information she would be ready to give response but if it was only a rhetoric and had no much advantage, she would ignore it.

        Economic observer of Yogyakarta-based Gajah Mada University (UGM) Revrisond Baswir recently called on the government not to seek new foreign loans. The total interest the government has to pay has risen from Rp62.5 trillion in 2004 to Rp101.7 trillion in 2009.

        The debts have caused Indonesia's foreign exchange reserves to continue to deplete. With debts, the government has to pay the principals of its debts and their interest, while the borrowed funds never actually entered the country because the government's expenditures were made overseas.

        According to economist Fadhil Hasan of the Institute for Development of Economics and Finance (INDEF), Indonesia's foreign debt has soared to the staggering figure of Rp1,667 trillion because the government has been accepting loan offers without actually needing the credits.

        Economic observer of the University of Indonesia Faisal Basri said Indonesia must able to manage and reduce its external debts in order to reduce its burden. "The government can reduce its debts by expanding its tax-resource bases and be efficient on its expenditure," Faisal Basri said on Monday.

        He said that the government had been able to reduce the ratio of its debts against its gross domestic products (GDP) to 32 percent. Indonesia debts swell during the monetary crisis in 1998.

        According to minister Mulyani, the debt issue in Indonesia was always seriously discussed by the media, NGOs and the public as a reflection of their disappointment during the New Order Government. In the era of the new order government, debts were not transparently managed. "It was even mentioned that financial leakage during the new order reached 30 percent," she said.

        But now, the regime let all the process be transparent. All the budgeting is discussed with the House of Representatives and the government, and is approved in the state budget. Also included in the state budget is the deficit financing, or debts.

        She said that in nominal term, the increase in the country's debts whether in the form of rupiah, dollar and yen, had happened as a result of accumulation from the past.

        "Our debts highly increased during the 1997-1998 economic crisis. The debt increase in nominal values was further worsened by the sharp depreciation of the rupiah," the minister said.

        Indonesia has debts with several main creditors such as Japan, the Asian Development Bank and the World Bank. Even the nominal value of the country's debts continue to increase, its ratio against the country's gross domestic product (GDP) continue to drop.

        Indonesia's stand-by loans up to now have reached US$5.5 billion dollars. About US$2 billion of the stand-by loans came from the World Bank, US$1.5 billion from Japan, US$1 billion dollars from Australia and US$1 billion from the Asian Development Bank (ADB). ***2*** (T.A014/H-NG//H-YH)

        (T.A014/A/A014/A/H-YH) 16-06-2009 23:28:11

RI NEEDS TO TIGHTEN EXTERNAL DEBT POLICY

By Andi Abdussalam

Jakarta, June 4 (ANTARA) - The government should tightly select unfinished projects that need funding and tighten its external debt policy so that the funds could be maximally used for the benefit of the people, economists say.         Amid concern of economists and observers at home over Indonesia's rising external debts, the Asian Development Bank (ADB) announced on Thursday it had approved a US$1 billion loan to Indonesia which brought the total amount of the facility to US$5.5 billion.         "The global financial crisis has made it expensive for Indonesia to access international debt markets and trade finance, which could constrain spending on essential social services and poverty alleviation programs," Jaseem Ahmed, director of Manila-based ADB's Financial Sector for Southeast Asia said in a press statement.         The Indonesia government has stated it only intends to access the facility if market conditions remain tight and the draw-down triggers set out in the financing plan are met.         Economists at home have of late worried about the rising of the country's external debts which have increased from Rp1,275 trillion in 2004 to Rp1,667 trillion in 2009.         "The government should stop seeking new external loans and instead do its best to reduce its external debt servicing burden," economic observer of Yogyakarta-based Gajah Mada University (UGM) Revrisond Baswir said last week.         Baswir called on the government not to seek new foreign loans. After all, the total interest the government has to pay also rose from Rp62.5 trillion in 2004 to Rp101.7 trillion in 2009.         The same concern is also raised by former economic and industry minister Kwik Kian Gie. The government must tighten its external debt policy so that the funds could be used as effectively as possible to serve the people's interest, he said.         "The government must be tight in seeking new loans from overseas. It must tightly select all unfinished projects that need funds or canceled projects if there are indications that their implementation would be delayed for a long time, or any projects made through collusion," the former minister said here on Thursday.         He said that the government should reject the offer of a donor agency which wanted to lend its money for development projects which actually only benefited the agency or country.         "Rich countries and donor institutions should not persuade Indonesian officials to design projects and to borrow their money with high interest," Kwik Kian Gie said.         To finance various development programs, the government could issue global bonds but should not carry high interests that would pose a burden to the state.         "It should not issue global bonds which carry an interest rate of 12-13 percent. This would pose a burden to the future government," Kwik Kian Gie said.         The possibility to issue bonds, especially to cover budget deficit, was also expressed by Minister for National Development Planning / Head of National Development board (Bapennas) Paskah Suzetta.         "The government would do its best to save on expenditures in order to cover the deficit, however. If it is not enough the government would take from external debts through a loan scheme or the issuance of bonds," the minister said         He said that the government still needs Rp10 trillion to cover the deficit of its 2010 state budget which is predicted to increase from 1.3 percent to 1.5 percent.         Paskah Suzetta said that every 0.1 percent deficit the government had to prepare US$500 million or Rp5 trillion. Thus, if a 1.5 percent increase is added to the budget the government would need Rp10 trillion to cover the deficit, he said.         The deficit existed as funds had to be made available to finance the fiscal stimulus in the 2010 budget that the government would likely provide again next year.         "The government will still provide fiscal stimulus in 2010 and some of the funds have been made available," he said on the sidelines of a seminar on the national bureaucratic reforms. Some of the 2010 fiscal stimulus funds would be allocated to strengthen the government's social safety net program and development of infrastructure.         Virtually, the Indonesian government is making its efforts to restrain from borrowing new money if not necessary. President Susilo Bambang Yudhoyono even rejected an offer of loan by South Korea when he visited the country last week.         "If there is no urgent need, we should not necessarily borrow money although South Korea has offered us a loan," the president said here before leaving South Korea for Jakarta, on Tuesday.         He said that the Indonesian government would not use external loans to reinforce its fiscal financing although the South Korean government had offered assistance.         Although the ratio of Indonesia's external debts to its gross domestic product (GDP) continued to drop it did not mean that the government should be lured to unnecessarily create new debts.         He said that calculations on how much debts were needed to stimulate growth and cover budget deficit were carefully made because debts could become a short-term solution but in the long run could turn into a burden.         Yudhoyono said that the ratio of Indonesia's external debts to its gross domestic product continued to narrow from 53.4 percent in 2004 to 32 percent in 2009.         Earlier, South Korean President Lee Myun Bak at the opening of an ASEAN - South Korea meeting offered additional loans to ASEAN member nations which could be used to develop their economy and infrastructure.         Lee offered a loan ceiling increase under the Official Development Assistance (ODA) scheme to US$400 billion in 2015 so that ASEAN economies could be strengthened. ***2*** (T.A014/A/HAJM/20:45/H-YH) (T.A014/A/A014/A/H-YH) 04-06-2009 21:50:57

ECONOMISTS WORRY ABOUT RISING RI'S EXTERNAL DEBTS

By Andi Abdussalam

Jakarta, May 28 (ANTARA) - Although some say Indonesia still needs foreign loans to finance its economic development, other economists express concern over the rising of the country's external debts which have increased from Rp1,275 trillion in 2004 to to Rp1,667 trillion in 2009, in addition to domestic debt which also have risen from Rp662 trillion in 2004 to Rp920 trillion in 2009.         "The government should stop seeking new external loans and instead do its best to reduce its external debt servicing burden," economic observer of Yogyakarta-based Gajah Mada University (UGM) Revrisond Baswir said Thursday.         The debts have caused Indonesia's foreign exchange reserves to continue to deplete. With debts, the government has to pay the principals of its debts and their interest, while the borrowed funds never actually entered the country because the government's expenditures were made overseas.         Therefore Baswir called on the government not to seek new foreign loans. After all, the total interest the government has to pay also rose from Rp62.5 trillion in 2004 to Rp101.7 trillion in 2009.         According to economist Fadhil Hasan of the Institute for Development of Economics and Finance (INDEF), Indonesia's foreign debt havw soared to the staggering figure of Rp1,667 trillion because the government has been accepting loan offers without actually needing the credits.         "The government has always accepted loan offers from other countries while there was actually no real need for the funds," Fadhli Hasan said.         Consequently, the government is compelled to create projects that were of little real benefit. "I don't need to name them but many projects just had to be initiated merely to spend the borrowed money," Hasan said.         According Hasan, the ways in which the loans were managed had been transparent enough but they were not as good as they should be. Foreign loans were now being managed by almost all existing government agencies so that the funds are not allocated and supervised effectively.         Revrisond Baswir said the amount of Indonesia's foreign and domestic debts is continuing to rise because the state's decision makers are ignoring their constitutional duty to keep the public sector under state control and manage it to the people's maximum benefit.         "During the past five years, there has been no visible effort by the government to consistently minimize debts. A fact is that our foreign debt has continued to increase and this situation is exacerbated by an escalation in domestic debt," he said.         In the meantime economic analyst of the Center for Strategic and International Studies (CSIS) Pande Radja Silalahi said the government could not be solely blamed for the increasing external debts. The House of Representatives (DPR) is also responsible for foreign debts with its approval to the budget proposed by the government.         "Therefore, the DPR must be more active in monitoring the use of the loans," he said adding that the issue had now been politicized while its management had been said as not transparent which was not true.         He said foreign debt management had so far been transparent because before the government decided to use the money DPR checked the plan. He said to avoid suspicion the DPR must monitor its use through sectors needing loan financing.         "The debt issue has now been used for deceiving by politicians," he said. Therefore, Daeng Naja, an economic analyst and Mulawarman state university lecturer, East Kalimantan, said Indonesian foreign debts should be transparently managed.         "I am a person who agrees that Indonesia should have a foreign debt," he said.         Silalahi concurred with Naja saying that the government could not avoid foreign debts because "Indonesia could make economic growth merely upon the country's strength without foreign financing because its financial resource is not yet adequate."         He said although the government could not avoid debts in stages President Susilo Bambang Yudhoyono had so far been able to reduce the country's dependency on foreign debts. "The foreign debts have even dropped to 35 to 36 percent while at the start of his administration the country's foreign debts reached around 53 percent," he said.         While the ratio of Indonesian debts against the gross domestic product showed a decline, the country's foreign debts increased from Rp1,294.8 trillion in 2004 to Rp1,667 trillion in 2009. The total interest the government had to pay also rose from Rp62.5 trillion in 2004 to Rp101.7 trillion in 2009.         However, Indonesia needed debts for the implementation of its development programs. "We won't depend on other countries if we are a rich country and dominate the world economy. But we depend on other countries, and whether we like or not, we need foreign loans to carry out development programs." Daeng Naja said.         The need for foreign loans is also voiced by National Development Planning Minister/National Development Planning Board Cheif Paskah Suzetta. He said Indonesia still needed soft loans to finance its poverty alleviation programs and infrastructure development.         Actually, international financial institutions offers Indonesia commercial loans while it still needs official development assistance (ODA), or soft loans to finance social-safety nets (JPS) programs.         Suzetta said Indonesia had become a country with a middle per capita income so that it would be reasonable if its development projects, including a subway system in Jakarta, were financed with commercial loans with higher rate of interest.         Yet, it still has social safety net programs that need soft loans.         "We also have poverty alleviation programs, social safety net projects and infrastructure development which will have an impact on poverty reduction and for all of this we need ODA loans," the minister said.***2*** (T.A014/A/HAJM/19:20/a014) (T.A014/A/A014/A/A014) 28-05-2009 19:14:12