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Debt paper overreliance has led to 'market colonization', says Indef economist
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Senior economist Faisal Basri (The Jakarta Post/vny)
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senior economist has said Indonesia’s increasing foreign debt in the last three years had trapped the country’s economy in being dependent on the global market.
Faisal Basri of the Institute for Development for Economics and Finance (Indef), who is also a professor at the University of Indonesia, said on Wednesday in Jakarta that Indonesia was overdependent on the sales of government debt papers (SBN) to finance its infrastructure projects.
“It is fine for the SBN to be controlled by foreigners, as long as there is no market fluctuation. But we are now colonized by the market, which is currently in a state of uncertainty,” he said in a discussion on Wednesday, as quoted by kompas.com.
The SBN's domination by foreign ownership is worrying, because Indonesia was not in control of the currently fluctuating market.
According to Faisal, it would be better for the government to seek its debts from international financial institutions like the World Bank and Asian Development Bank, as well as the Japanese government, as such debts would not be affected by market conditions.
The use of the funds would also be controllable, because the government must consult the creditors in using the fund, he added.
Bank Indonesia announced last week that Indonesia’s foreign debt reached US$375.5 billion in late January, a year-on-year growth of 10.3 percent. The central bank confirmed that the majority of government debt ($180.8 billion) was in SBNs, while the remaining debt ($55.7 billion) was in loans from foreign creditors. (bbn)
