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Paris Club The government will not seek reduction in the Paris Club III forum in
April because the proposal will be discussed bilaterally with creditor
countries, says secretary of the Financial Sector Policy Committee (KKSK)
Syafruddin A. Temanggung. He said on Jan. 17 that efforts to reduce the debt
burden did not necessarily have to go through the 'hair cut' method. So far,
the government proposal for debt reduction is through debt-to-nature swap,
which has been tried with the German government but will not be
discussed in the meeting either. Previously State Minister/Head of the National Development Planning Board Kwik Kian Gie was of the opinion that the government should start asking for debt reduction from creditor
countries joined in the Paris Club meeting, arguing that debt reduction demands
have emerged everywhere in the world. Indonesia was reported to seek the rescheduling of its sovereign debt and interest rate payment, together
totalling US$ 2.6 billion. For comparison, Indonesia secured in 2000 a
debt-rescheduling scheme worth some US$5.8 billion. Minister of
Finance Boediono said that to safe guard the meeting the government had
extended its extended fund facilities (EFF) contract with the IMF till 2003.
The government's will to stop the EFF contract was strong, but the 2002
budget condition did not allow Indonesia to not propose for debt rescheduling
in the next meeting. According to Boediono, the plan to extend the co-operation was not because the government 'loves' the IMF, but
because the effort for the debt rescheduling in the Paris Club III is the only
foreign debt management strategy at present. Sources: BI 18/01, 22/01, JP 22/01 IMFHead of the Indonesian representative of the International Monetary
Fund said on Jan. 22 that there would be no new letter of intent (LoI) in
the future. The debt clearing will still be annual, but it does not mean
every time there is a review there should be a new LoI. There will only be
small amendments in the signed LoI since, according him, the LoI signed last
December has covered all the government plan for the future. An IMF
review team is scheduled to arrive in Jakarta in the first week of February. Source:
Kompas 23/01 General NewsThe fuel price hikes enforced last week have caused prices of basic commodities to soar and forced people to reduce their expenses.
Villagers in several parts of Central Java have been reported to going back
using firewood for cooking instead of kerosene. The return to firewood will
in its turn surely threaten the already meagre Java's forest. The price hikes have also spurred protests in several cities across
the archipelago. Hundreds of fishermen demonstrated at the Mataram
district legislature in West Nusa Tenggara (NTB) on Jan. 22, urging the
government to pay attention to their economic plight following the fuel price
rises. In the West Java town of Indramayu, thousands of commuters were
stranded on the street as drivers went on strike on Jan. 17 to oppose the fuel
price increases. The strike by at least 120 drivers of the city public
transport won support from local NGOs and student groups. The striking drivers
said the increased price of fuel had raised their operational costs, while
many passengers were reluctant to pay more than the established bus fares.
A similar strike was also staged by drivers in the South Sulawesi
capital of Makassar, where fuel price rises have caused the price of staple foods
and other basic commodities to soar since Jan. 18. The government said the poor should not be affected as it had
allocated to them sufficient compensation funds of US$274 million this year.
Minister of Information Syamsul Muarif said on Jan. 23 the funds would be
disbursed to some 55 million poor people in the country. More about the fuel price hikes: http://infid.ngonet.be/subsidiespowderkeg.html Sources::
JP 23/01, 24/01 No US creditIndonesia said on Jan. 23 it would not use the farm credit guarantee programme from the US government, known as GSM-102, for the 2001/2002 fiscal year in a bid to protect locally produced commodities from
imports. The surprise decision not to use the programme, which amounted to
US$750 million in 2000/2001 (Oct-Sept) and was mainly used by local importers
to buy corn, soybeans and soymeal, is likely to sharply reduce supplies
of these commodities. Many analysts speculated the move was linked to the
cash-trapped government's efforts to economise and reduce its gaping
budget deficit. The decision surprised and disappointed traders, who had
urged the Indonesian government to seek $1 billion in the new season after the original allocation of $500 million was raised last year to $750 million
due to surging demand. The GSM programme underwrites credit from
private U.S. banks to approved foreign banks to finance U.S. agricultural
sales. The programme, coupled with a ban by Jakarta on South American grain, helped the United States sharply boost its soymeal market share in Indonesia in 2001 to about 700,000 tonnes from around 250,000 tonnes
the previous year. But the Director General of Food Crops at the
Agriculture Ministry Farid Bahar said the influx of cheaper imports from the
United States had depressed prices of locally produced commodities and
resulted in lower production. Some 80 percent of Indonesia's annual soybean
imports and 60 percent of soymeal imports came from the United States last year,
while U.S. corn accounted for 50 percent of total corn imports to Indonesia.
Traders said the decision was a heavy blow to local feed industries
and the producers of tempeh and tofu, the popular soybean cake and curd. The
U.S. government launched the GSM-102 program in 1998 to enable crisis-hit
Asian countries, including Indonesia, to keep importing farm products
despite the economic downturn which made it difficult for them to secure credit
from local banks. Source:
Reuters 23/01 Regional News Aceh Free Aceh Movement (GAM) Commander Tengku Abdullah Syafe'i and his six-month pregnant wife have been killed in a skirmish with the
Indonesian Military (TNI) and the National Police in Jimjim Village, Pidie, on
Jan. 22. Their death has been confirmed by relatives and GAM's spokesperson
Tengku Daud. The incident also claimed lives of five GAM guerrillas. Analysts said on Jan. 24 that separatist guerrillas in Aceh would
press on with their 25-year-long revolt against Indonesian rule despite the
killing. Meanwhile, Minister of Defense Matori Abdul Jalil said that the
decision to re-establish the regional military command (KODAM) in Nanggroe Aceh Darussalam (NAD) was final. President Megawati has ordered TNI
commander Laksamana Widodo AS and the Minister of Defense to prepare the
personnel organisation structure and material for the re-establishment. The Commission for Missing Persons and Victims of Violence (Kontras) has earlier rejected the idea of re-establishment to solve the problem in
Aceh. According to Kontras, the idea went against the will of the Acehnese, arguing the voices of some of Aceh's elite did not represent the Aceh people. There has been demand from Aceh people for justice long before
some elite emerged with the reinstatement idea. Matori in his response
simply said, "Which people?" Sources: KCM 23/01, RO 23/01, TI 23/01, SP 23/01, JP 23/01, AFP 24/01 Papua The militant Muslim group Laskar Jihad is reported to have sent at
least 100 of its Islamic warrior to Papua to join a Jakarta-backed militia
to fight against Papuan independence, a human rights group claims. The
rights groups Elsham says Laskar Jihad has been called into the city of Fak
Fak to help train the East Merah Putih militia, an anti-independence gang.
The group, based outside the capital, Jayapura, had earlier alleged that anti-independence militias were being fostered in far-flung parts of
the province by parts of the armed forces in order to stoke conflict and punish
anyone advocating independence. Elsham said on Jan. 21 that one of its
activists who worked for the Government in Fak Fak and his family had repeatedly received death threat because he reported to the police
about a Laskar Jihad training camp which was raided by the police last month. Laskar Jihad denies any presence in Papua. Meanwhile, the commander of
Indonesia's Kopassus special forces, Major-General Amirul Isnaeni, has
challenged police statements that evidence points to the involvement of
Kopassus soldiers in the assassination of Papua's flamboyant
independence leader, Theys Eluay. Sources: SCMP 23/12, SMH 22/01 Abbreviations: BI: Harian Bisnis Indonesia KCM: Kompas Cyber Media RO: Republika Online SCMP: South China Morning
Post SMH: Sydney Morning Herald SP: Suara Pembaruan Daily TI: Tempo Interaktif Stichting TitanE |