Bank Indonesia signs $500m standby loan

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)