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Indonesia needs more than debt moratorium needed to recover from human tragedy
INFID Statement - December 31, 2004
The death toll in the tsunami tragedy that swept Indonesia, in Aceh and North Sumatra is feared to have killed nearly 40,000-80,000 people.
We grief over the catastrophe and the death of the people in Aceh and North Sumatra. We express our deepest sympathy and solidarity for the people of Sri Lanka, India, Thailand, Malaysia who are currently suffering from the devastation unleashed by the tsunami. Overall, nearly all governments and international aid agencies have reacted promptly to the catastrophe that hit the countries bordering on the Indian Ocean and have already started comprehensive aid operations. To date, Japan has pledged 30 million US Dollar, the European Union 40.5 million, the United States 15 million, Australia 7.8 million, China 2.6 million and Singapore 1.2 million US Dollar. Aid agencies such as the International Federation of Red Cross and Red Crescent Societies, UNICEF, Medicines sans Frontiers, Oxfam and others call for donations.
However, the magnitude of the disaster has literally left these countries paralysed that an extraordinary global effort is needed, especially in the area of financing recovery program.
The financial condition of Indonesia, with very limited room for development spending in the budget, a budget deficit of around US$ 3 billion, and the huge debt burden: a total of US$ 134,85 billion (domestic and external) or more than 60% of the GDP, cripples its ability to finance the emergency and recovery program. The Government of Indonesia estimated that it needs 10 trillion rupiahs or US$ 10 billion or 1/3 of the annual loan and grant that it receives through the consortium of donors/creditors: the Consultative Group on Indonesia (CGI) for recovery program in Aceh, North Sumatra and other affected areas.
We therefore welcome the call of the German Chancellor Gerhard Schoereder to give Indonesia a debt moratorium.
However we are of the opinion that Indonesia needs more than debt moratorium. Debt moratorium would allow Indonesia not to pay its debt for a certain period, but it will have to fulfil its obligation to the creditors in the future. Thus debt moratorium is simply shifting the debt burden to the next generation.
We believe that Indonesia will need all the sources available to implement reconstruction and recovery program as well as saving the future generations. Debt repayment in the future would seriously affect Indonesia's ability to do this.
We therefore call:
1. To the international creditors to give debt relief to Indonesia and other Southern Countries effected by the tsunami so that we would have enough rooms for prioritising reconstruction and recovery program;
2. To international governments and organisation that all supports for Indonesia and other Southern countries in response to the disaster should be in the form of grants and aid;
3. To the Government of Indonesia to use the initiative from Germany, to negotiate for a comprehensive debt relief;
4. To the Government Indonesia to ensure transparency and accountability in channelling aid to Aceh, North Sumatra and other affected areas.
International NGO Forum on
Indonesian Development
Jakarta December 31st, 2004
Binny Buchori
Executive Secretary
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