US President Barack Obama on Friday spoke to President Susilo Bambang Yudhoyono about the global economic crisis, underscoring warming relations between the two countries.
Few details of the telephone call were released but Indonesia recently asked US Secretary of State Hillary Clinton for stand-by facility to further underpin the country’s safeguards.
Indonesia already has a $5.5 billion stand-by guarantee from a consortium of the World Bank, the Asian Development Bank, Japan and Australia.
"The president had a wide-ranging telephone discussion with President Yudhoyono this morning," a White House statement said, Agence France-Presse reported.
"The president consulted with President Yudhoyono on the global economic crisis and affirmed the need for close cooperation, noting the upcoming G-20 Summit that both leaders will attend."
Obama and Yudhoyono will meet at the G-20 economic summit of developed and developing nations in London on April 2.
The leaders also discussed avian influenza, climate change, counterterrorism and how to bring democracy and human rights to Myanmar during the call, the White House said.
In addition to the World Bank consortium stand-by loan and any possible financial backing from the US, Indonesia may have an opportunity to get an additional stand-by loan of $1 billion under the Asian Development Bank's plan to increase its capital by up to 200%, Asia Pulse reported.
The head of fiscal policy of the ministry of finance, Anggito Abimanyu, said Tuesday that every member state was required to contribute to the plan, which would cost Indonesia a contribution of about $33.6 million a year.
Finance Minister and Coordinating Minister for Economic Affairs Sri Mulyani said foreign donors would also support Indonesia's idea to form a stand-by loan which is formally called as public expenditure support facility (PESF).
The PESF is one of the government's efforts to deal with the impact of the current global financial crisis and part of a series of comprehensive steps taken by the country to deal with the challenge, including a fiscal stimulus package worth $6.1 billion.
"The PESF is a contingency planned to maintain international and domestic markets' confidence and to boost the country's capacity to seek funds needed to finance development," she said.
The government could access stand-by loans and bond securities made available in the facility to finance its infrastructure, social and other important programs when markets could not provide the needed funds at a reasonable cost.
The facility assures that the government would not reduce spending and public services badly needed in view of the impact of the current global crisis, she said.
World Bank would contribute up to $2 billion to the PESF while Japan would add up to $1.5 billion and Australia and the ADB respectively up to $1 billion, Indrawati said.
The country’s banks are reported to be moving into a more secure position, reducing lending and parking money in short-term central bank certificates as the global economic crisis continues to impact the country.
Bank Indonesia (BI) banking statistics state that outstanding loans fell to Rp1,289.84 trillion in January from Rp1,307.69 trillion in December, The Jakarta Post reported Friday.
The total volume of January loans outstanding was the lowest total loan portfolio figure in the last four months.
Placements by banks at BI rose Rp24.51 trillion to Rp346.84 trillion in January from Rp322.33 trillion in December, according to the report.
Of this amount, short-term BI certificates (SBIs) attracted Rp208.51 trillion in January, a Rp41.99 trillion increase on total holdings of Rp166.52 trillion in December.
Meanwhile, the level of third party funds slid to Rp1,748.81 trillion from Rp1,753.29 trillion.
The pace of the economy is contracting as a result of the crisis. BI data revealed a slight decline in lending rates from an average 14.2% in the last week of December 2008 to 13.93% by the second week of March, while deposit rates declined from 8.75% to 8.32%.
President Susilo Bambang Yudhoyono urged the banking industry to lower lending rates to help drive the economy, which is now relying heavily on domestic consumption and government spending.
Finance Minister Sri Mulyani Indrawati said Wednesday the government had told state banks to initiate steep interest rate cuts but BI deputy governor Muliaman D. Hadad said that in normal times, banks would need two to three months to adjust lending rates to new BI rates.
Vice President Jusuf Kalla meanwhile said Wednesday the economy will expand 4.5-5% this year, a more optimistic figure than the central bank's forecast now revised down to 4%, Reuters said.
“Compared to other countries, Indonesia has a more stable growth. We hope for 4.5-5% growth this year,” Kalla said. “No country has fared better than Indonesia in this crisis.”
The economy grew a weaker-than-expected 5.2% in the fourth quarter from a year earlier, but was better compared to Asian neighbors such as Singapore and South Korea, whose economies contracted.