Indonesian officials say they are satisfied with an agreement to reschedule billions of dollars in debt. The decision by the Paris Club group of creditors comes after much debate in Jakarta about whether Indonesia should have its debt burden lifted entirely.
The deal struck between Indonesia and the Paris Club, a group of international creditors, allows Indonesia to reschedule five-point-four billion dollars of foreign debt. The loans were set to mature over the next 17 months.
According to a statement released by the Paris Club, Indonesia now has to pay a maximum of $2.7 billion by December 2003, instead of the $7.5 billion originally due.
Under the arrangement, Indonesia has 20 years to repay overseas development loans, including a ten-year grace period. It has 18 years to repay commercial loans, with a five-year grace period.
Indonesian Finance Ministry officials and members of the Paris Club reached the agreement during meetings this week in France.
Coordinating Minister of Economic Affairs Dorojatun Kuntjoro-Jakti described the plan as much better than previous accords, because it eases pressure on state budgets.
Indonesia has not fully recovered from the collapse of its economy in 1997, during the Southeast Asian financial crisis. Its total debt stands are roughly $140 billion, half of which is owed to foreign creditors. This is the third time Indonesia has sought to reschedule loans since the financial crisis.
Local media report that the debt problem has sparked debate among academics across Indonesia. Some argue that Indonesian officials should push for a debt write-off. They say Indonesia deserves the break, because many of its economic woes were caused by the authoritarian government of former President Suharto, and it should not be punished while it tries to enact democratic reform.
Others, including Vice President Hamzah Haz, argue against a write-off, saying that Indonesia should not make any moves that suggest it cannot take care of itself.