ADB to disburse $150m in loans

ADB to disburse $150m in loans

Berni K. Moestafa, The Jakarta Post, Jakarta

The Asian Development Bank (ADB) said Monday it expected to
disburse US$150 million in new loans to Indonesia, in what could
be the first tranche of a $400 million loan deal with Jakarta.

ADB's Indonesia representative, Jan Van Heeswijk, said the
loans were program loans tied to the country's corporate
governance reforms.

"We approved the loans last week on Dec 4," Heeswijk told
reporters, after a seminar on privatization.

He said the $150 million was initially part of the loans put
on hold because the government fell short of meeting the loans
requirements.

Government officials estimated that some $600 million in ADB
loans were still in the pipeline due to slack progress in reform.

Heeswijk said a main criteria the government has met, and
which led to the latest approval, had been the return of
political stability.

But the disbursement of the remaining $250 million would again
depend on meeting more criteria linked to corporate governance.

Some of these criteria, he said, concerned state firms'
accounting practices or the selection of their board of
commissioners.

Another condition is for the government to increase the number
of privatized state firms, he added.

Heeswijk said the other $250 million would likely come in the
form of two more bonds, or tranches, spanning another one to two
years.

The ADB's $600 million loan program should help finance
various programs covering financial reforms, community
development, electricity and industrial competitiveness and the
development of small and medium-sized enterprises.

But they are also tied to conditions such as the deliberation
of new laws concerning money laundering and investment.

The government uses foreign loans to finance this year's state
budget, which could reach some Rp 54.7 trillion (about $5.2
billion). Of this amount, foreign loan are expected to contribute
some Rp 19.93 trillion to this year's deficit financing.

The government will cover the remainder with proceeds from its
privatization program, and the Indonesian Bank Restructuring
Agency's (IBRA) asset sales.