China's rail project in Indonesia pushes Jakarta into debt
Oct 20, 2021
Jakarta [Indonesia] October 20 : Faced by the price of cost overruns on China's signature Jakarta-Bandung fast-rail project, Indonesia's government has been forced to dip into the state budget for projects which continues to witness construction delays and land acquisition issues.
The cost of the 143-kilometre rail link project has escalated from USD 6.07 billion to more than USD 8 billion with a completion date now set for late 2022 which is two years behind schedule, Asia Times reported.
The project was launched in 2015 and is a part of China's ambitious Belt and Road Initiative (BRI), which has left Indonesia and many other countries saddled with a mountain of often unreported debt, informed a report by AidData research.
The report also stated that China has promised to pay more than USD 34.9 billion in financial aid to Indonesia between 2000 and 2017, in form of official development assistance (ODA) or other official flows (OOF), Asia Times reported.
Researchers also say that Jakarta has USD 4.95 billion of sovereign debt exposure to China and USD 17.28 billion in what they call 'hidden public debt', which has been incurred by state-owned companies or other government entities without sovereign guarantees, Asia Times informed.
That further means that 78 per cent of Jakarta's debt to Beijing is out of the government's books.
Meanwhile, earlier reports have also informed that different countries owe at least USD 385 billion amount of debt to China which has slipped through scrutiny of international lenders such as the World Bank and the International Monetary Fund (IMF).
The "hidden debt" is due to an increasing number of deals struck not directly between governments through central banks but through often opaque arrangements with a range of financing institutions, hence "the debt burdens were kept off the public balance sheets," Radio Free Asia reported citing a four-year study by AidData.
The study also added that nearly 70 per cent of China's overseas lending "is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries" rather than sovereign borrowers which are central government institutions, Radio Free Asia reported.
