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( NGO in Special Consultative Status with the Economic and
Social Council of the United
Nations, Ref. No : D1035 )Jl. Jati Padang Raya Kav.3 No.105,
Pasar Minggu, Jakarta Selatan 12540 - Indonesia
Phone (62-21) 79196721, 79196722, 7901950 * Fax (62-21) 7941577
* E-mail: [email protected] *
www.infid.org
INFIDs Statement
ADBs Statement on Indonesias Debt Issue
is Misleading and Replete with Vested Interests
Today, on August 10th, 2010 ADB together with ILO and IDB has
released the Country Diagnostics
Studies report entitled Indonesia: Critical Development
Constraints. The document establishes the
sources of Indonesias economic barriers and their probable
solutions. Amid the launching of the
report, Edimon Ginting, ADBs economist pointed out that
Indonesia need not be alarmed of its
foreign debt burden which has now reached Rp 1,625 trillion as
its ratio further decreases in
comparison to the countrys GDP currently at Rp 6,253.79
trillion. (DJPU, Finance Ministry of the
Republic of Indonesia, July 2010).
INFID emphasizes on the need to adopt a discerning stance
towards ADBs statement on
Indonesias foreign debt position. The statement on Indonesias
debt ratio against GDP is indeed
misleading. It should be noted that despite Indonesias high GDP,
it is not entirely under the
governments ownership. GDP calculation in Indonesia still
includes foreign ownership and wealth
in the country. In reality, Indonesias total debt which
continues to experience an upward trend in
nominal terms has imposed a heavy burden on the national budget
each year. In the forthcoming
five years, at least Rp 100 trillion must be set aside each year
for debt service payment. The national
budget, in the next five years, should instead concentrate on
financing efforts to accelerate the
achievement of MDGs which to this day continues to proceed at a
snails pace.
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INFID is of the opinion that ADBs statement is both deceiving
and replete with vested interests. As
a regional financial institution and one of the largest
creditors for Indonesia, it is undoubtedly in the
best interest of ADB to ensure that Indonesia continues to be in
debt, thus allowing the institution to
constantly register prodigious gains.
It should be kept in mind that following the economic crisis in
2008, ADB suffered from funding
difficulties as a significant portion of its funds are derived
from the crisis-hit capital market. With
the intention to amass funds, in its annual meeting held in Bali
in May 2009, ADB urged its
members to inject additional capital which among others was
agreed to by Indonesia. In addition to
the capital market, ADBs funding sources are also drawn from
interest payments made by its
debtor countries including Indonesia. To this day, Indonesia
remains to be ADBs largest debtor. As
a middle income country, Indonesia is no longer entitled to
receive the low-interest ADF (Asian
Development Fund) category of ADBs loans, but can only obtain
loans with commercial interestrates known as OCR (Ordinary Capital
Resources).
ADBs statement which asserts that Indonesias debt position is at
a safe level is also highly
contradictory with President Susilo Bambang Yudhoyonos earlier
appeal that called for the country
to reduce its dependence on foreign debt, as delivered during
the limited cabinet meeting on the
economy held on 19 July 2010. INFID, therefore urges all
government ranks to pay more serious
attention in decreasing the countrys reliance and inclination
towards foreign debt. INFID also
demands that ADB ceases from interfering with Indonesias
economic sovereignty by inveigling the
country with new loans.
Jakarta, 10 August 2010
Sincerely,
Wahyu Susilo
