German style 'Haircut'

Indonesia has an opportunity to have its DM50 million debt written off. The requirement is to finance a Rp125-billion project. Is this do-able?

December 4, 2001

Indonesia's debts amounting to Rp250 billion will be considered fully paid by Germany if Megawati's government can finance a project worth 50 percent of the debt, namely Rp125 billion. An additional condition is: the project must be entirely financed in rupiah. At a glance, the offer should be welcomed. However, if the financing is to be in rupiah, the offer to ease the debt could be more of a burden. Nevertheless, it was the first debt write-o...

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