ADB grants $240m in loans to Indonesia

ADB grants $240m in loans to Indonesia

MANILA (Reuters): The Asian Development Bank (ADB) said on Monday it has approved a total of US$240 million in cheap loans to improve the infrastructure of Indonesia.

In a statement, the Manila-based multilateral bank said it will extend $124 million for the construction of a new airport in eastern Kalimantan province and another $116 million to improve the water and drainage facilities of north Sumatra province.

The first project also involves the upgrading of two other airports in west Kalimantan and west Irian Jaya, it said.

Besides the loan, ADB said a $975,000 technical assistance grant from the Japan Special Fund will be given to Indonesia for the upgrading of its airport facilities.

The airport modernization project, worth a total $278 million, is scheduled for completion by 2002.

"Aviation is playing an increasing role in the development of the region as the least-cost mode of long distance transport," it said.

"Air traffic demand for the three airports is forecast to grow at seven to nine percent annually over the long term," it added.

Meanwhile, the ADB said it has also approved a $116 million loan to help finance a project to improve the water supply and drainage facilities in north Sumatra province.

The Indonesian government will also provide a total of $72 million for the project, the ADB said.

"The project will improve, widen and extend over 30 km of roads and bridges, extend flood control works on major rivers and improve over 300 km of drains," it said.

Both loans are repayable over 25 years, including a grace period of five years.