House seeks power in debt management

Aditya Suharmoko ,  The Jakarta Post ,  Jakarta   |  Tue, 06/30/2009 11:26 AM  |  Business

Legislators are seeking more power to intervene in the government's foreign debt management, amid rising political tension over the growing sovereign debt.

Members of the House of Representatives are seeking to include a provision in a bill on foreign loans and grants (PKLN) currently being drafted by the government to ensure the new authority over decision making in debt management.

"The House asks to be involved in the process of getting debts in the bill on foreign loans and grants," Olly Dondokambey, deputy chairman of the House's Commission XI, which oversees financial affairs, said at a hearing Monday.

The House summoned government and central bank officials to the hearing amid growing criticism that foreign debts were burdening Indonesian citizens.

The criticism has arisen as President Susilo Bambang Yudhoyono seeks re-election.

"I once thought the bill was not important," said Rama Pratama of the Prosperous Justice Party (PKS).

"But with the onset of the financial crisis, the government has to resort to getting new foreign loans. This makes the bill far more important, including the role of the House.

"This will relate to the good governance of the state," he added.

The bill has been in the works for quite some time, but the government has yet to propose it to the House for unclear reasons.

According to latest data from the Finance Ministry, by the end of 2009, total foreign debts reached Rp 732 trillion (US$71.7 billion).

At the start of Yudhoyono's administration in 2004, foreign debts totaled Rp 637 trillion.

Although foreign debts have continued to increase, the government runs a prudent debt management scheme, Finance Minister Sri Mulyani Indrawati said on June 14, using the loans for projects to spur growth.

The government also pays more debts than it borrows annually.

Moody's Investors Service recently upgraded Indonesia's credit rating outlook from "stable" to "positive", while many developed countries had their ratings downgraded.

The Supreme Audit Agency (BPK) also gave an "unqualified" opinion on Indonesia's debt management, meaning the management had improved.

Legislators Dradjad H. Wibowo, from the National Mandate Party (PAN), said the government should have disclosed the process of getting loans, "for the sake of the people".

"All strategic details should be presented to the House so we can know the impact *of loans*," he said.

To run prudent debt management, the PKS's Rama said the government should have an integrated debt management office, encompassing operations under the Finance Ministry, the National Development Planning Agency (Bappenas) and other related institutions.

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