ADB vows not to let Indonesia 'fall'

JAKARTA (JP): The Asian Development Bank is ready to provide more loans to the country to prevent a further deterioration of the country's ravaged economy, its program director said here yesterday.

Shoji Nishimoto acknowledged the bank was "prepared to expand" loans to Indonesia.

"Indonesia has been the largest client and borrower of the ADB... and we're not a commercial bank, so we shouldn't let Indonesia fall," he told reporters at a media conference announcing the disbursement of US$100 million of the bank's $300 million in emergency loan commitments to the country.

He said the emergency loan would be used to finance projects which would help the poor in surviving the year-long economic crisis.

The government has projected the 1998/1999 budget deficit will amount to 8.5 percent of the gross domestic product due to its huge subsidy commitments for food, fuel, electricity and employment creation programs.

Although the International Monetary Fund (IMF) and other donor institutions including the World Bank and the ADB have committed to provide the country with a multibillion dollar bailout package to meet the deficit, about $4 billion to $6 billion is still needed.

A team of top Indonesian officials led by the Coordinating Minister for Economic, Finance and Industry Ginandjar Kartasasmita is currently abroad, partly to lobby international donor institutions to pour in more money to the country.

Nishimoto said ADB's $300 million emergency loan could be treated as part of the additional funds.

The ADB last month approved a $1.5 billion loan to help restructure the country's troubled banking financial sector.

It will be given in three tranches during the 1998/1999 fiscal year. About $550 million had been disbursed by June 25.

The country is currently plagued by its worst economic crisis in three decades, prompted by the sharp depreciation of the rupiah against the U.S. dollar. The rupiah has lost about 80 percent in value from Rp 2,450 against the dollar in July last year.

The economy is projected to shrink by at least 10 percent this year, which is the first negative growth in 30 years, with inflation to hit 80 percent and more than 15 million people to lose jobs. (rei)