Utang Luar Negeri Dan Defisit Transaksi Berjalan Dalam Perekonomian Indonesia

There are two big problems with the Indonesian balance of payments. First, a large amount of foreign debt (US$ 89,5 billion at the end of 1993). Second, an increasing current account deficit, which reached an all time record of US$ 7,943 billion in the 1995/1996 fiscal year. Previous studies on foreign debt by Winata (1994) and Radelet (1995) revealed two important points. Winata concludes that there is no direct relationship between foreign debt and economic growth. This is a reasonable conclu-sion, since the government's foreign debt has been concentrated on infrastructure development. On the other hand, Radelet concludes that Indonesia is not headed toward a crisis in the immediatefigure. Borrowed funds have generally financed productive investments, contributing to rapid growth in GDP and exports since the !cue 1980s. This article examines the relationship between foreign debt and current account deficit in Indonesia, and explores the experiences of foreign debt in several developing countries. It concludes thatforeign debt has the potential to fill a current account deficit. However, because of the current high level of foreign debt, and the risk associated with this debt, this solution to the current account deficit is not to be recommended. This work also suggests rescheduling some megaprojects in order to control the import of large amount, of capital goods and repressing the import of some consumption goods in order to stem the outflow of foreign currency. Furthermore, it is suggested that more efforts to attract and realize directforeign investment need to be made to solve the problem of the current account deficit