Thursday, January 06, 2005

Write a Letter To Support Debt Relief for Indonesia!

From Jess. Please see this related action alert also:

Action Alert!

Urgent Action, INFID:

Indonesia Needs Debt Relief after Tsunami Devastation

Please take action and circulate widely TODAY


Following the earthquake and tsunami in Aceh, North Sumatra and Nias, INFID calls on the international community to mobilise global solidarity and pressure rich countries to grant debt relief to the countries destroyed by the catastrophe as a form of global solidarity for poverty eradication. There are already positive indications that some countries are considering such measures, but further backing and official confirmations of the details of the proposals are needed.

Supporters of this appeal should contact decision-makers in their countries by Thursday 6th January (the day of a donor conference on Indonesian reconstruction) demanding:

1) A moratorium on Indonesia's debt repayments for the next 15 months
2) An international conference to deal comprehensively with Indonesia's debt problems

Specimen letter text appears below.


Destruction in Aceh, North Sumatra and Nias. The horrifying earthquake and tsunami have crushed major parts of Aceh, North Sumatra and Nias. The death toll of this catastrophe has reached 96,000 (including 270 students, 600 policemen, 1000 soldiers, 20,000 children) and thousands of others who were killed by the huge wave. Around 500,000 people were forced to leave their homes and villages because they have nothing left. Almost all public facilities are not functioning. Schools, hospitals, the electricity network, telecommunication facilities, roads, and government buildings cannot be used anymore. The huge wave has also ruined thousands of homes.

The reconstruction needs are enormous and pressing. Preliminary official estimates for the reconstruction of basic infrastructure in Aceh and North Sumatra are Rp. 10 trillion (US$ 1 billion), however this figure is undoubtedly too small because it considers only physical infrastructure not social reconstruction needs. The Government of Indonesia will not be able to self-finance this and is reliant on aid and debt relief from the international community. Indonesia has very tight budget and social spending is in any case too low owing to debt repayments even when there is no emergency. In 2004, the government agreed to make full payment of its principal and interest of Indonesia's external debt, amounting to Rp. 68.8 trillion (US$ 6.8 billion). For 2005, Indonesia has allocated Rp. 71.98 trillion (US$ 7.1 billion) to pay the principle and interest on external sovereign debt. This represents a quarter of Indonesia's domestic revenue. Indonesia will reimburse over US$ 7 billion every year from now until 2009, according to the Indonesian Central Bank.

Indonesia's debt payments for 2004 are 10 times more than spending on health and 32.7 times more than spending on housing.


In this context, Indonesia clearly needs significant debt reduction if it is to meet its constitutional obligations to meet the essential human needs of its peoples. Resources released through a debt write-down would help to kick-start the social and economic rehabilitation and reconstruction of the devastated regions. This translates into improved infrastructure, more employment opportunities and poverty reduction.

Governments of developed nations have a moral obligation to assist those whose lives have been turned upside down by this horrific disaster, and many governments have indeed pledged their help and support, which we warmly welcome. As well as new aid pledges several proposals have emerged from Germany, UK, Italy, France and Canada for a temporary halt to debt repayments by some of the countries devastated by the disaster, including Indonesia. These proposals will be discussed at the 'Tsunami Summit' to be held in Indonesia on 6 January and at the next meeting of the 'Paris Club' in France on 12 January.

There is a precedent for such actions by creditor nations. In the wake of the devastation caused by Hurricane Mitch in 1998, Honduras received significant debt relief including a Paris Club moratorium on bilateral debt service payments between November 1998 and December 2001.

INFID would like to stress however that while it welcomes the indication from some of Indonesia's principal creditor countries that they support proposals for a debt payment moratorium that these initiatives are insufficient. Indonesia's external debt burden will remain a serious drain on government resources this year and for many years to come.

INFID therefore proposes the following:

1. While we recognise that the Paris Club is deeply flawed, the overwhelming human need in Indonesia and other affected countries makes it an imperative for the club to grant an immediate and unconditional moratorium on the region's debt over the coming fifteen months;2. That during this time, an international conference on Indonesia's debt be convened with the objective of finding a lasting, just and comprehensive solution to Indonesia's debt burden. The guiding principle of this conference should be achievement of the Millennium Development Goals (MDGs). Assessments of debt sustainability should include calculations of Indonesia's financial needs to achieve the MDGs taking into account the prevailing conditions after the tsunami disaster.


Support INFID's proposals, by:

· Writing letters to the Head of States and the Ministers of Finance of rich countries, members of the Paris Club;· Writing letters to the President of the World Bank, Managing Director of IMF, President of the Asian Development Bank and the General Secretary of Paris Club.

Jakarta, January 5th, 2005
Ivan Hadar, Executive Secretary

Specimen letter text appears below. Please adapt, translate and send as soon as possible. Plus keep us informed of your actions and their outcome!

Wednesday 5th January

Dear [insert name of decision-maker here],

I am writing to urge you to take further action to support the hundreds of thousands of people affected in Indonesia and other countries by the devastating tsunami. I am concerned that the governments in the affected countries will not be able to take sufficient action to provide for the short-term welfare or long-term needs of affected people because of their budgetary situations. As well as new emergency aid I believe it is vital that a moratorium on debt repayments be instituted rapidly so that governments can spend money.

Indonesia last year spent one quarter of the government's domestic revenue on debt payments. This is clearly intolerable, especially in such circumstances, and we urge you to support a 15 month moratorium on Indonesia's debts and the convening of an international conference during this time to find a comprehensive solution to the debt problems of this and other affected countries. I look forward to your response setting out your government's detailed position on this very important issue.

Yours sincerely,

[Insert your name and address]