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By Chris Hook
Embezzlement of $10 billion in international loan money by corrupt members of the Soeharto regime seems to have placed the present Indonesian government and the
Indonesian people in a “no-win” situation.
The $10 billion is the tip of the iceberg; Indonesia’s foreign debt is $154billion, equal to its gross domestic product. And more than half of this - $84 billion –
is owed by government and state-owned enterprises. Funds are now being directed away from areas like health and education to help pay off the debt.
The International Crisis Group, a Brussels-based
organisation run by former Australian Foreign Minister Gareth Evans, says the debt imposes a huge cost in human terms.
Binny Buchori, head of the International NGO Forum on Indonesian development, a peak
international body of non-government organisations concerned with Indonesian development, says the debt may set Indonesia back several generations in its quest for development.
Millions of dollars is being
withheld from education and up to half the archipelago’s 200 million population is languishing in poverty, unable to afford simple medicine to prevent their children dying.
Jakarta-based Ms Buchori has made a
lightning visit to Australia on behalf of Jubilee Australia for a series of meetings with the public, various Indonesian community groups and government officials.
She told The Catholic Weekly that social
spending had been heavily affected by Indonesia’s debt burden, which has radically increased since the Asian financial crisis of 1997, when the crash of the rupiah led to huge bail-out packages from the
International Monetary Fund.
Indonesia is dependent on imported foods, cooking materials and medicines, but the plunging rupiah has put these out of the reach of most ordinary Indonesians, Ms Buchori said.
“And now the government has cut subsidies for the education sector. The university’s subsidy has been cut and they are now required to look for funds from the private sector,” Ms Buchori said.
“They
call it autonomy of the university, but it’s not autonomy; it’s the privatisation of state institutions.”
The International Crisis Group says the roots of Indonesia’s debt problem lie in the Soeharto regime.
General Soeharto resigned in disgrace in 1998. But over his 32 year reign, the so-called “New Order” government was granted $US 30 billion in loans by the World Bank.
By the Bank’s own admission at
least $US 10 billion was embezzled by the corrupt regime, yet the current Indonesian government is still held responsible for the debt.
Jubilee Australia regards such debt as “odious” and, with Ms Buchori’s
organ isation, is calling for debt relief.
Although some debt has been rescheduled Ms Buchori and Jubilee Australia argue that the Indonesian people should not be held responsible for flawed lending
practices.
But the World Bank is opposed to debt cancellation and Indonesia is not poor enough to qualify for the debt relief offered through the Highly Indebted Poor Countries program.
And the
International Crisis Group has noted that servicing the debt is not conducive to adequate social spending:
“Whether or not the debt is financially sustainable, it imposes a huge cost in human terms by
absorbing public funds that could be used for more positive purposes,” the International Crisis Group said. “The 2001 budget sets aside 52 per cent of total state spending for debt service, compared to less than
seven percent for health and education combined.”
Ms Buchori said the debt must be reduced in spite of World Bank protests.
“Debt reduction is a must if the creditors believe that the Government should
be allowed to protect the rights of the most vulnerable groups,” she said.
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