By Adianto P. Simamora and Aditya Suharmoko
It seems the government has developed a fondness for exploiting the hot topic of climate change to secure foreign loans, then channeling the money elsewhere — and environmentalists want it to stop.
Instead, if Indonesia wants fresh foreign funds, it should apply existing international mechanisms on emissions reductions, through which developing nations can get financial incentives from rich countries, Greenomics Indonesia says.
"There are no compelling reasons for Indonesia to seek foreign loans in the name of mitigating climate change. It really does not make sense," Greenomics executive director Elfian Effendi told The Jakarta Post on Friday.
"The government must revoke its plans (to seek new foreign loans), or use existing mechanisms to get financial aid and technical assistance from wealthy nations."
Rahmat Waluyanto, director general of debt management at the Finance Ministry, said the government had received loans worth US$200 million from French financial institution Agence Francaise de Developpement and $300 million from the Japan Bank for International Cooperation — all for climate change programs.
But that is not where the funds are headed.
"The funds will go to the state budget," Rahmat said.
That is, they will be used to cover the state budget deficit, forecast in the revised 2008 budget to reach Rp 94.5 trillion ($10.24 billion).
He said the government expected to secure Rp 26.4 trillion in program loans this year.
As of June, the government had received $400 million in loans, or 15 percent of its target.
The Post's sources at the Forestry Ministry and the State Ministry for the Environment said these loans would not be used to finance climate change programs.
"With the loans, don't expect too much to go toward better mitigation efforts. The money will be spent elsewhere, including to pay the direct cash assistance for poor people introduced after the fuel price rise," a source said.
Mahendra Siregar from the Coordinating Ministry for the Economy said the country's climate change mitigation and adaptation programs had been financed by the state budget.
"We are committed to not using foreign money to fund climate change programs. We will use the loans obtained through the issue of climate change to cover the budget deficit only," said Mahendra, who was also part of Indonesia's negotiator team during the UN climate change conference in Bali last year.
Indonesia is the current president of the United Nations Framework Convention on Climate Change (UNFCCC), the world's most authoritative body on the climate change issue.
The UNFCCC requires rich nations to provide financial assistance for developing and poor nations to help them reduce emissions and adapt to the effects of warmer temperatures.
The Kyoto Protocol binds only rich nations to reducing emissions.
Developing and poor nations can participate in emissions reduction programs including through the clean development mechanism (CDM). In return, they receive cash injections.
Indonesia, the world's third-largest forestry nation, could also pull in huge dollars through voluntary markets from carbon selling under reduced emissions from deforestation and forest degradation.
A coalition of green groups has repeatedly called on wealthy nations to stop providing loans to developing countries before involving them in emissions reductions.
The coalition, including the Indonesian Environment Forum (Walhi), the Indonesian Biodiversity Foundation (Kehati), the Indonesian Center for Environmental Law (ICEL), Forest Watch Indonesia, Greenpeace Southeast Asia and Friends of the Earth, first made a statement on debt relief at last year's ministerial meeting on climate change in Bogor, West Java.
"It is still our position that efforts by developing countries to combat climate change will be hampered if they dig into natural resources to repay foreign debts. We call for debt relief for developing nations," said Farah Sofa, a former climate campaigner from Walhi. (The Jakarta Post)
