German bank to give DM300 million loan
German bank to give DM300 million loan
JAKARTA (JP): German bank Kreditanstalt fr Wiederaufbau (KfW)
agreed here yesterday to provide loans worth DM300 million (about
US$168.5 million) to Indonesia's private sector.
Gert Vogt, chairman of the German bank for reconstruction,
said the loans would be channeled through Bank Indonesia and the
country's financing sector "to cover urgent import needs and to
bridge liquidity gaps for necessary working capital".
He said DM250 million would be given as trade financing to
help the ailing manufacturing sector import raw materials, while
the remaining DM50 million would be used to finance small and
medium sized enterprises.
He said there was an urgent need to finance manufacturing
sector imports because the operations of many companies had come
to a standstill.
"We want to make sure that in this difficult situation, the
manufacturing sector gets the necessary financial support so that
they can begin to produce again," he said.
Vogt said the technical aspects of the loans would be worked
out between KfW experts and finance ministry officials in talks
beginning early next month, after which the funds would be
disbursed.
He said the bank's staff would also provide the finance
ministry and Bank Indonesia with technical assistance to help
them manage and monitor use of the loans.
The loan agreement signed with top officials from the
Indonesian Ministry of Finance is based on a memorandum of
understanding signed in February by German's Finance Minister
Theo Waigel and Mar'ie Muhammad, his Indonesian counterpart at
the time.
Reschedule
Separately, the German finance ministry said in Bonn on
Thursday that it would agree to reschedule outstanding debts owed
by Indonesia's private sector.
Debt rescheduling is expected to absorb US$2.25 billion of the
extra $6.2 billion in fresh funds pledged recently by the IMF and
other donor countries and organizations.
Vogt said here yesterday that he was impressed with the
changes that have taken place since his last visit to the country
in February.
"I am personally encouraged by the future of the country in
many respects," he said.
"We trust the country, its economy and its ability to overcome
the current situation," he said.
"You cannot change everything overnight", he added in
reference to the difficulties continuing to beset the country.
Indonesia changed government in May after massive unrest
forced president Soeharto to resign. He was replaced by his vice
president, B.J. Habibie.
Vogt said KfW intended to help revitalize manufacturing in the
country and to this end would focus particularly on the power,
transport, health, and water supply sectors.
He said the bank would also focus on helping small and medium
enterprises, a sector which had become the backbone of the German
economy.
Vogt arrived here last Wednesday accompanied by top KfW
executives.
The delegation met with President B.J. Habibie on Thursday and
have also held discussions with a number of the country's top
ministers and officials. They return to Germany on Sunday. (das)