BI secures US$500m standby loan<\/p>\n
JAKARTA (JP): The central bank, Bank Indonesia, has secured a
\nstandby loan worth US$500 million from a syndication of 40 major
\nbanks from Asia, Europe, Australia and the United States.<\/p>\n
Bank Indonesia's governor, J. Soedradjad Djiwandono, said
\nyesterday the loan would be used to back up the country's balance
\nof payments.<\/p>\n
Despite Indonesia's increasing foreign exchange reserves it
\nstill needed standby loan facilities to enable it to curb the
\nnegative impact of the globalization on the world's financial
\nmarkets, Soedradjad said.<\/p>\n
\"Besides that we need a cushion and that is this standby
\nloan,\" Soedradjad said.<\/p>\n
The coordinating arrangers include Commerzbank Aktiengesells
\nChaft, Fuji Bank Ltd, JP Morgan, Sanwa Bank Ltd. and the Bank of
\nTokyo Mitsubishi Ltd.<\/p>\n
The loan agreement will be signed today by executives of the
\n40 banks and Bank Indonesia.<\/p>\n
Soedradjad said the central bank had to secure the new standby
\nloan to keep the level of its standby loans at $2 billion.<\/p>\n
About $500 million of the old standby loans had matured so the
\ncentral bank needed to secure a similar amount.<\/p>\n
Soedradjad said the facility would mature in eight years and
\nbe structured as revolving credit throughout its life.<\/p>\n
He said the central bank would draw on the loan only if
\nnecessary.<\/p>\n
But it is not yet clear how much the interest margin and
\nupfront fees will cost.<\/p>\n
Cushion from standby loans is necessary for countries with
\nlarge current account deficits like Indonesia to curb speculative
\nattacks on their currencies.<\/p>\n
The government projects a current account deficit of $8.8
\nbillion this fiscal year from $7 billion last fiscal year.<\/p>\n
The deficit is expected to expand to $9.8 billion next fiscal
\nyear, or 4 percent of gross domestic product.<\/p>\n
Indonesia has been able to finance its current account
\ndeficits from capital inflows and can maintain its foreign
\nexchange reserves at a healthy level of about five months of
\nimports.<\/p>\n
The central bank projects its foreign exchange reserves will
\nreach $19.1 billion this fiscal year and just over $20 billion
\nnext fiscal year -- enough for 4.7 months of imports.<\/p>\n
Soedradjad said the standby loan, one of a series the central
\nbank has signed since 1984, was one of the bank's monetary tools
\nto back up its foreign reserves.<\/p>\n
Early last year, the central bank signed in Singapore $500
\nmillion in standby loans with a syndication of 44 major banks.<\/p>\n
The loans carried an annual interest rate of 0.625 of a
\npercent above the London Inter-bank Offered Rates, with a
\ncommitment fee of 0.31 percent per annum.<\/p>\n
Soedradjad said the central bank had also signed bilateral
\ncooperation agreements with central banks in several Asia-Pacific
\ncountries to cushion possible massive foreign currency outflows.<\/p>\n
The most recent deals were the repurchase agreements with six
\nAsian and Australian central banks.<\/p>\n
The agreements enable each central bank in the region to sell
\ntheir U.S. dollar-denominated treasury notes to their
\ncounterparts for fresh cash on a repurchase basis. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-secures-us500m-standby-loan-1447893297",
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