GOVT ADVISED TO BE SELECTIVE IN USING EXTERNAL LOANS

Jakarta, June 11 (ANTARA) - The government should be selective in using foreign loans so that external debts would not become a heavy burden on the nation, an economic observer said.

"The government should not be too bold in taking risks by using loans for something not urgent," economic observer Hendrawan Supratikno said here on Thursday.

The economic observer, who is also a member of 'Indonesia Rise' said the use of external loans for non-selected targets would increase the burden of the Indonesian people in repaying it.

He also reminded the government of the importance of avoiding any influence of foreign parties in the drafting of economic laws, including the law on the independence of Bank Indonesia (BI/the central bank).

In connection with the latest loan obtained by Indonesia from the Asian Development Bank (ADB), Hendrawan said that the government must be accurate in using a loan. Investment must hit the target which would not increase the debt burden of the Indonesia people.

Previously, executive director of the Institute for Global Justice (IGJ), Indah Suksmaningsih said Indonesia's external debts up to the forth quarter of 2008 had reached US$149.14 billion.

In the bilateral loan structure, about 72.82 percent were from Japan, the United States and European Union.

In the meantime multilateral loans were 53.41 percent from the ADB and 35.80 percent were from the World Bank.

Earlier, the Asian Development Bank (ADB)'s management had approved a US$1 billion loan for Indonesia to sustain critical public expenditures for poverty alleviation, social protection and infrastructure maintenance in the wake of the global financial crisis.

"The global financial crisis has made it expensive for Indonesia to access international debt markets and trade finance, which could constrain spending on essential social services and poverty alleviation programs," said Jaseem Ahmed, Director of Manila-based ADB's Financial Sector, Public Management and Trade Division for Southeast Asia Department.***2***