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INFID’S STATEMENT

65 YEARS OF INDEPENDENCE AND INDONESIA REMAINS MIRED IN POVERTY

AND CAUGHT IN A DEBT TRAP

As part of Indonesia’s commemoration of its 65 years of independence, the House of 

Representatives (DPR) and the Regional Representatives’ Council (DPD) have jointly convened

a Plenary Session to hear out the President’s State of the Nation Address as well as the

Introductory Address on the Financial Note to the Draft State Budget for the year 2011, held on

Monday, 16 August 2010.

In his State Address delivered in the morning, the Indonesian President emphasized more on

claims of development achievements, but failed to highlight on various issues on which their 

causalities should also be reflected upon. In the delivery of his speech, President SBY even

mistakenly mentioned the year 2014 as the deadline for achieving the Millennium Development

Goals (MDGs) when it have been 2015 (this error was eventually corrected at President SBY’s

official website at www.presidensby.info). This erroneous statement reflects how SBY is more

oriented towards finalizing programs under his administration which ends in 2014. This is also

indicated in the government’s intention to reduce the poverty rate to roughly 8-10 percent by

2014. The President however did not mention on the poverty level for 2010.

By failing to state the poverty rate for 2010, the Indonesian government therefore lacks the

seriousness to adopt MDGs as indicators for fulfilling the people’s basic rights. The year 2010 is

in fact the time to carry out a 10-year evaluation of MDG achievements which also applies to the

government of Indonesia.

This lack of seriousness is also reflected on how the government has overlooked existing data on

the declining trend of the country’s human development index. The presidential address utterlyignored the deterioration of the quality of human life in Indonesia which has even dropped to a

level that is even worse than in Palestine and Srilanka.

This heedlessness of the commitment to achieve MDGs is even more pronounced in the

Introductory Address on the Financial Note to the 2011 Draft State Budget delivered later in the

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evening. Not a single statement in the address reflects on the importance of the 2011 Draft State

Budget as an instrument for accelerating the achievement of MDGs.

The Draft State Budget for 2011 draws more attention to promises of increasing the salary rate of 

civil servants and military personnel/police force but neglects the need to improve the overall

well-being of the common people.

The social protection scheme offered by the 2011 Draft National Budget remains rooted on a

caritative approach that focuses on social aid instead of a more permanent social security system.

It appears that the government views itself as a benevolent government to its people, while

neglecting to alleviate the afflictions of the people stemming from erroneous state policies,

including those that depend on foreign debt.

The 2011 Draft State Budget also continues to reflect on how the government of Indonesia has

not been able to cure itself from its debt addiction. President SBY has indeed reneged on his

 pledge to reduce the country’s debt burden in order to ease pressure on the national budget, as

delivered during the Limited Cabinet Meeting on the Economy held 19 July 2010. The 2011

Draft State Budget remains reliant on foreign debt. With an ever-growing deficit at Rp 115.7

trillion, a greater amount of debt is undoubtedly needed to cover this discrepancy. On the other 

hand, maturing debt service payments also entail more allocations from the 2011 Draft State

Budget to settle interest payments amounting to Rp 116.4 trillion. Foreign debt payment is even

higher than the amount of new loans (negative flows).

State programs that President SBY identifies as programs to improve the people’s welfare are

mostly financed by foreign debt, such as the National Community Empowerment Program

(PNPM), School Operational Aid Funds (BOS), Family Hope Program (PKH), Direct Cash

Transfer (BLT), and Health Insurance for the Poor (Jamkeskin). This only demonstrates that the

 present government is helping today’s poor communities by imposing a future burden on the

 poor who are forced to repay these loans.

In view of these circumstances, INFID believes that various distressing facts are intentionally

concealed in the President’s State Address which is instead replete with claims of success stories.

INFID also views that the posture and format of the 2011 Draft State Budget which remains

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satiated in foreign debt will not be able to function as a financing instrument for the achievement

of MDGs.

Jakarta, 16 August 2010

Sincerely,

Don K Marut

Executive Director 

(0811 9671 327)

Wahyu Susilo

INFID Program Manager 

(0815 1039 2859)