ADB pledges $1.52 billion in loans to RI this year

JAKARTA (JP): The Asian Development Bank plans to provide Indonesia with US$1.52 billion in policy-based loans this year to help the country come out of its economic crisis, ADB president Tadao Chino said.

Chino said on Wednesday that the planned loans were still subject to the approval of the board of directors of the Manila- based bank.

"I assured President Habibie that the ADB will continue to provide assistance to Indonesia on the basis of rigorous professional analysis and sound judgment and that the bank will focus on such areas as will be of long-term benefit to Indonesia and its people," he told reporters after meeting with President B.J. Habibie.

He explained that the loans would be split among five different areas including $400 million for power sector restructuring, $300 million for health and nutrition sector development and $320 million for community and local government support sector development.

The other $300 million for industrial and trade deregulation and small and medium-sized enterprise development, and the remaining $200 million for corporate governance reforms for state enterprises.

The ADB last year approved two loan packages including $1.5 billion for financial sector reforms and a $300 million loan for the development of social welfare. The bank has so far released $1 billion of its commitment.

Chino, who arrived in Jakarta on Tuesday for a two-day visit, did not say when the bank would hold its board of directors meeting for the planned loans.

Chino said that the bank's priorities for Indonesia is to strengthen the country's banking sector, restructure the real economy, and help the poor survive the current economic crisis.

Indonesia hoped to raise $1 billion from the ADB to help finance the 1999/2000 state budget, which will need at least $10.32 billion in foreign loans.

Chairman of the National Development Planning Board (Bappenas) Boediono said on Friday that out of the $1.52 billion of the ADB financial package mentioned by Chino only around $1 billion would be provided for Indonesia in the 1999/2000 fiscal year.

"The $1.52 billion loan plan is based on their (ADB's) fiscal year," he told reporters before presiding over a meeting at his office.

Finance Minister Bambang Subianto told the House of Representatives (DPR) on Tuesday that the government had secured $4.4 billion in foreign loans to finance the fiscal budget to March 2000.

He said that this consisted of $1 billion from the ADB, $1 billion from the World Bank, and $2.4 billion from Japan through the so-called Miyazawa Plan.

The government had earlier secured another $4 billion in project loans, which are mostly aimed at financing ongoing government projects.

He said that the government would try to secure the remaining $1.9 billion at the Consultative Group on Indonesia (CGI) donors meeting in June.

Boediono expected Japan to become a significant contributor at the next CGI meeting.

"The $2.4 billion Miyazawa loan is only the first step. There will be a second step loan," he said. (rei/prb)