Another Impact of Foreign Debt for Development of Infrastructure in Indonesia


BLOKBERITA -- We are absolutely don’t want Indonesia to face financial crisis as faced by Greece and many African as well as Latin American countries due to poorly managed external debts.

As of December 2015, according to Bank of Indonesia (BI), Indonesia’s external debt amounted to US$ 304.6 billion or about Rp 4.234 trillion. It grew by 3.2 percent compared to October 2015. Executive Director of the Department of Communications BI, Tirta Segara (19/1) said the main cause is long-term external debt.

Indonesia's long-term external debt in November 2015 grew by 6.1 percent (YOY), 5.5 percent higher than the previous month (YOY). At the same time, the short term debt decreased by 12.5 percent. The biggest portion comes from private sector where the debt was US$ 137.7 billion or 45.2% of total external debt.

Despite the fast growing external debt, the Government of Indonesia has been applying fresh credit for four infrastructure development programs to the China led Asian Infrastructure Investment Bank (AIIB) in a bid to deal with fund shortage.

Bappenas’ Deputy for Development Funding Wismana Adi Suryabrata (25/1) said the government is seeking US$ 1.003 billion from AIIB. Included in the four programs are 116 projects in the List of Foreign Borrowing Plan (Blue Book). Beside China, the Book says, the government is seeking fresh fund from other financial institutions and states.

Secretary of the Ministry of Housing and Public Works (PU-Pera), Taufik Widjoyono (27/1) said that overall, there are 9 development programs worth US$2,4 billion in which the source of financing should be completed this year. While the four programs to be financed by AIIB include roadwork in North Kalimantan and East Kalimantan, the third stage of rail development, revitalization of TVRI, and the improvement of clean water supply in some areas.

However, the government should aware of risks behind external debt. A project could be halted if the lender faces financial crisis. As said by a BI’s report last month, where external debt is still under control, but the risks to the economy still persists. Therefore, the central bank will continue monitoring the growth of external debt especially in private sector. The aim is to that external debt plays its best in financing national development where risks can be completely managed.

Indeed, the increasing external debt need not to worrisome if managed prudently. It can even be relied upon for economic growth, job creation in line with tee government plan to make Indonesia the global maritim fulcrum, and capable of paying off any debt.

We are absolutely don’t want Indonesia to face financial crisis as faced by Greece and many African as well as Latin American countries due to poorly managed external debts.

In the end, Indonesia should make an inquiry about countries which will be partners in economic development. It must be conducted thoroughly because any mistake made in choosing economic partners, we will be punctured with the botched economic process. Hence, every Indonesian should respect and serve national interests. Their awareness on external debt management is an obligation!
(Inrev./bazz)
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