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Indonesia a model of how to cut debt, says Germany's Merkel

Publication Date : 11-07-2012

 

Visiting German Chancellor Angela Merkel held up Indonesia as a model of how countries could cut their debt in a few years, noting that European countries reeling from the financial crisis might draw inspiration from it.

She added that she remains optimistic that Europe will claw its way out of its current difficulties.

Indonesia is the German leader's only Asian stop. She is in Jakarta at the same time as International Monetary Fund chief Christine Lagarde, who yesterday secured a US$1 billion loan from Indonesia to the IMF.

The presence of the two women, who are crucial to shaping the world economy, signifies growing global interest in Indonesia's economic heft.

Merkel is the fourth European leader to visit President Susilo Bambang Yudhoyono this year.

"Like our relationship with China, we want to expand our cooperation with Indonesia," she told reporters.

"We offer our experience in infrastructure and in other sectors, and hope this continues."

The German Chancellor noted that Indonesia, too, had sought the IMF's help when its currency plunged during the 1997 Asian financial crisis.

Indonesia's ability to recover, and slash its sovereign debt from 80per cent of gross domestic product to 24 per cent in a matter of years, she said, could provide a model for Europe.

She was speaking after she and Yudhoyono signed a wide-ranging agreement to strengthen cooperation in security, economy, development, health, education, science and the environment.

During her two-day trip, she visited a mosque and a church before calling on Yudhoyono at the palace.

Today, Merkel is due to visit the site of the country's tsunami early-warning system, which was built with German assistance.

Trade between Indonesia and Germany now totals US$6.69billion, said Coordinating Minister for Economic Affairs Hatta Rajasa. He said his target is to double the figure in three years.

Germany imports food, footwear, agricultural produce, textiles and ores from Indonesia.

Indonesia buys machinery, communications equipment, electronic components, motor vehicles and pharmaceuticals from Germany.

 

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