Jakarta – Around 75 percent of Indonesia's forthcoming state budget would be earmarked to repay domestic and foreign debts, an economic observer said.
"If efforts to reschedule debts through the "Paris Club" go smoothly, I predict that around 75% of the state budget will only be used to repay debts," Sri Adiningsih said in a discussion organised by Real Estate Indonesia here yesterday. Adiningsih is economics lecturer at the Gadjah Mada Univrsity in Yogyakarta, Central Java.
Around Rp60 trillion is to pay interest on domestic debts related to bank recapitalisation and 60% of next year's state budget will be used to pay instalments of overseas principal debts and interests.
The government will face difficulties in meeting routine obligations such as paying salaries for civil servants and the armed forces.
On economic predictions for the coming year, Adiningsih said that if security and political conditions remained stable, then in the year 2000 Indonesia would be able to emerge from the economic crisis.
"Indeed, the five percent or more growth will not be achieved like during the period before the crisis, but the economy will definitely grow. In order to reach the level of prior to the crisis, at least we need another two years," she said.
Siswono Yudohusodo, a former cabinet member, said that in 2003 the Indonesian economy would achieve economic growth as in 1994, but achieving top growth rates like those in 1996 would take a much longer time.
He hoped the government, through the Indonesian bank Restruxcturing Agency (IBRA), could accelerate efforts to settle debts of developers that had been kept at bay for too long.
Army spokesman Major Genral Sudrajat said the Indonesian economy would not recover unless there was security and political stability.
For this reason, he said, in relation to the tensions now prevailing in Aceh, the year 2000 would be the most crucial year in terms of security and political conditions in Indonesia.
"The key will be that in the year 2000, if there is no political decision by the government in relation to Aceh, then I will not know what will happen. Nonetheless, if the Aceh issue can be settled, then the cases of Ambon and Irian Jaya are much easier," he said.
He expressed hope that the government could as soon as possible take a political decision on the Aceh issue so that security and political conditions could be guaranteed.