Government Cancels Foreign Debts
Tuesday, 02 January, 2007 | 16:13 WIB

TEMPO Interactive, Jakarta: The government cancels foreign debts valued to US$276.2 million.

According to the National Development Planning Minister Paskah Suzetta, total foreign loans for on- going projects reach US$15 billion. The government has canceled half the foreign loans because many of them were not absorbed. “The ongoing useless debts were canceled,' he told Tempo last week in Jakarta.

The data of the National Development Planning Agency shows that the average absorption rate of foreign debts was only US$2.5 billion per year. The cancellation of the unserviceable debts became one of the best choices because the government can economize paying the commitment fee.

He explained that the obstructed foreign debts absorption occurred by virtue of the project’s unwillingness and lack of accompanying funds. Additional funds that must be prepared are quite large: around 15 percent of total foreign financing.

Director of Control for Development Financing Benny Setiawan said that the cancellation was made based on the observation of the National Development Planning Agency. It was the second cancellation after the first cancellation of US$200 million occurred in mid 2006.

In addition to the loan cancellation, the government will restructure foreign debts. Deputy Minister of National Development Planning at the Development Financing Division Lukita Dinarsyah Tuwo said that the restructuring will be carried out by intensifying the debt swap.

“This year, the total will be around Rp1 trillion. It surely is a small amount. However, it may support development if it is made use of carefully,” he said.

Kurniasih