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 |
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