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 |
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