WALHI statement to the CGI meeting, Jakarta 7-8 Nov 2001

CGI Members in Jakarta

Dear Sir/Madam,

Since the Government of Indonesia signed IMF's Letter of Intent (LOI) in 1998, several impacts happened in many sectors. From the study done by Walhi and Indef on social, economic and environmental impact, it is clearly shown that there is a correlation between LOI IMF with environmental degradation in Indonesia.

From the public sector, state budget is so biased on banking sector and repayment of debt. As a result, state commitment and budget allocation to environmental sector and energy conservation decreased by 50 percent.

In the forestry sector, since IMF required to release log export ban in 1998, the number of timber export is increasing sharply and illegal logging tends to increase up to 20 million cubic.

Plantation sector has a very similar fate, the impact on the liberalization of oil palm plantation industry is greater threat to nature forest conversion. The expansion is more intensive on economic crisis, and it reached 2.2 million hectare or almost 90% from total addition of oil palm plantation. Investigation result in East Kalimantan and Riau show that illegal logging and illegal export were stimulated since IMF forced the structural adjusment program.

By virtue of the above mentioned condition, then IMF, World Bank and CGI members should share the responsibility for any existing programs and projects they have supported that have caused environmental and social damage. 

Walhi is urging CGI members to reduce Indonesia's debt by implementing logging moratorium. Debt reduction is demanded after considering that the ability of Indonesian government and Indonesia people to repay its debt is decreasing significantly and the existing state budget can not act as economic recovery stimulant. On the other hand, due to debt repayment obligation which are getting bigger each year, the government is triggered to exploit natural resources for the sake of the state revenue. This leads to massive environmental destruction, in particular for forest resources.

If logging moratorium is put in place, then the government can restructure Indonesia forestry and can rehabilitate the degraded forest resources. If CGI members agree to reduce Indonesia's debt by implementing logging moratorium, the state budget which was supposed to repay debt, could be used to overcome the social and economic impact of logging moratorium and can create stimulant for economic recovery program.

I'm looking forward to hear your positive response to our suggestion. Thank you very much for your attention.

Sincerely yours,
Emmy Hafild
Executive Director

Jakarta, 8 November 2001

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