JAKARTA -(Dow Jones)- Indonesia will this year extend $2.52 billion in trade financing to local exporters to support trade, Finance Minister Sri Mulyani Indrawati told reporters Tuesday.
The government has also approved a capital reserve of IDR6 trillion for its newly-created trade financing agency, Indonesia Eximbank, Mulyani said.
Mulyani said the $2.52 billion trade financing was agreed as part of an initiative by Group of 20 countries to supply a total of $250 billion to importers and exporters.
She said Bank Indonesia, the government, local banks and the Japan Bank for International Cooperation will provide facilities to disburse the funds to domestic exporters.
Mulyani said the government has also agreed to this year provide an initial capital reserve of IDR4 trillion ($536 million) for Indonesia Eximbank. The reserve will be expanded to IDR6 trillion next year using funds from the state budget, she said.
"It is planned that Eximbank will improve Indonesia's exports in this time of global economic weakness," Mulyani said.
Eximbank will provide export financing, guarantees and insurance either in conventional or Shariah-based format to small and medium enterprises as well as larger corporations, Mulyani said.
Indonesia's imports and exports have both fallen sharply as the global economic downturn curbs external and domestic demand.
Imports in June fell 34% on year and exports 27%.
The government previously signed a deal with Japan Bank for International Cooperation under which JBIC will this year provide $500 million to Eximbank for trade finance purposes. However, it isn't clear whether this was a separate deal to those announced Tuesday.
On the import side, Eximbank will initially prioritize "necessary" imports such as goods required for infrastructure projects, Mulyani said.
Eximbank, previously known as Bank Ekspor Indonesia, was earlier this year mandated to become a dedicated trade finance provider, and is expected to be fully functional by the end of the year.