Bank Indonesia signs $500m standby loan

JAKARTA (JP): Bank Indonesia signed in Tokyo yesterday a standby loan agreement worth about US$500 million with a syndicate of major international banks in order to support the position of its foreign exchange reserves, a central bank official said yesterday.

Sumitro, Bank Indonesia's vice director for foreign affairs, said that the standby loan, with a maturity of eight years, carried an annual interest rate of 0.625 percent above the London Inter-Bank Offered Rate.

The loan, which will be cashed only when the central bank considers it necessary to improve the position of its foreign reserves, carries a commitment fee of 0.135 percent per annum, he said.

"We have to pay the commitment fee even if the loan is not used," he said.

The loan, one of series of standby loans signed by the central bank since 1984, was arranged by JP Morgan, a financial institution of the United States.

Members of the loan syndicate include the Commerze Bank of Germany, Netwest Bank of Britain and three financial institutions: Bank of Tokyo, Industrial Bank of Tokyo and Sakura Finance Asia.

Sumitro said the latest standby loan was essential to maintain the position of the central bank's total outstanding standby loans at about US$2 billion.

"We had to obtain a new standby loan because about $400 million of the total outstanding standby loans had already matured," he said at a routine banking workshop with finance journalists.

The central bank began using a standby loan facility in 1984 as a debt instrument to support the country's balance of payments. The loan has been gradually increased to achieve a level of $2 billion.

Sumitro said that, in the central bank's experience, maintaining the position of the standby loans at the $2 billion- level was adequate to safeguard the country's balance of payments.(hen)