Minister for National Development Planning Bambang Brodjonegoro sees Indonesia' economic growth rate will stagnate at the level of 5.3 percent in this year over the investment, exports and import development until June - Photo by President Office

JAKARTA (TheInsiderStories)—Indonesian government will borrow US$6.5 billion of foreign loans to finance 42 priority projects, according to the list of priority foreign loans plan 2018, one senior official said on Wednesday (4/7).

The loans include US$2.5 billion from Japan International Cooperation Agency (JICA), $1.229 billion from the World Bank, $113.3 billion from Islamic Development Bank, US$300 million from Asian Development Bank, $250 million from Asian Infrastructure Investment Bank, $925 million from China, $377.6 million from South Korea, $319 million from France, and $256.6 million from Austria.

National Development Planning Minister Bambang Brodjonegoro said the list of priority foreign loans plan was made as a guideline of the 2019 development plan. “These projects included in the list are ready to be implemented,” he said.

Those projects included in the blue book list of 2015-2019. It includes tunnel in Payakumbuh-Pangkalan toll road project, Pelosika dam project, mass rapid transportation phase II project, the Gatot Subroto Army Central Hospital project, and agrarian reform acceleration program.

Indonesian government earlier borrows US$650 million loans from the World Bank to tackle childhood stunting and modernize irrigation system.

According to the Bank Indonesia data, the country’s foreign debt reached $356.95 billion at the end of April 2018, decreased $1.43 billion from the previous month. The government debt fell $856.7 million to $183.83 billion and private foreign debt fell $570.97 million to $173.12 billion. It consists of $55.35 billion of loans and $125.15 billion of bonds.

The foreign debts were equivalent to 34.77 per cent of gross domestic product (GDP) by the end of the first quarter of this year. Indonesia’s GDP reached $1,031.87 billion in the first quarter of this year, 1.6 per cent rise from $1,015.57 billion in the first quarter of last year.

The government debt payments during January-April 2018 reached $4.85 billion, of which $3.26 billion of principal and $ 1.59 billion of interest.

The President Joko Widodo’s oppositions always criticize the government foreign debts. One of the sharpest criticism was raised by the opposition Gerindra Party leader Prabowo Subianto that earlier said based on data from rating agency Moody’s that Indonesia is the riskiest country in terms of debt in Asia with India.

Prabowo said the total debt of Indonesia including government debt, state-owned enterprises, and private companies reach Rp9,000 trillion even though government debt around Rp4,000 trillion.

Another criticism raised by the former Coordinating Maritime Affairs Minister Rizal Ramli that earlier revealed Indonesia’s economy is in a less healthy condition due to the foreign debt ratio. However, in his opinion, the government always evasive by stating that Indonesia’s debt is still safe.

He said government always compares Indonesia’s debts ratio to other countries including the United States and Japan even though the comparison is not apple to apple. He confirmed that Indonesia’s debt ratio to GDP is lower than Japan, but 80 per cent of Japanese’s debt comes from domestic debts.

“So if there is international turmoil, it will not be too disturbed,” he added.

The Minister of Finance Sri Mulyani Indrawati responded the criticism by stating that debts are still in line with the 2018 state budget assumption of 2.19 per cent which has been approved by the House of Representatives. She added the state budget deficit actually can be reduced as the oil price hikes due to the increase of oil and gas revenue and non-tax revenues.

“But because we have to add (budget) subsidy, then we have additional expenses, but in total, our posture stays at a maximum of 2.19%,” said Indrawati.