Govt asks ADB to ease terms on US$600m loan package

Govt asks ADB to ease terms on US$600m loan package

Berni K Moestafa, The Jakarta Post, Jakarta

A US$600 million loan package from the Asian Development Bank
(ADB) is at stake, as the government falls behind in meeting the
bank's loan conditions, according to a government official.

Deputy to the Coordinating Minister for Economy, Syafruddin A.
Temenggung said on Monday the government had asked ADB to ease
the conditions it could not meet on time.

"Right now, the government is asking the ADB to change the
conditions (for disbursement) to something the government can
achieve," Syafruddin was quoted as saying by Reuters.

According to him, the government needs ADB's funds by December
to help fill this year's gapping state budget deficit.

ADB's loans will help finance projects covering financial
reforms, community development, electricity and industrial
competitiveness and development of small and medium size
enterprises.

However, the bank has tied its $600 million loans with terms
that may not be realized by the year's end.

Among them is the deliberation of new laws concerning money
laundering and investment.

While a bill on money laundering is being discussed by
legislators, the one on investment has yet to be submitted.

Other requirements were the introduction of new incentives and
loosening of trade barriers for foreign investors.

Syafruddin said that little progress had been made on meeting
these conditions.

The ADB expects to disburse some $1 billion in loans this
year, of which most would go into poverty alleviation projects.

The bank said earlier the funds were part of ADB's loan
pledged during last year's meeting of the Consultative Group on
Indonesia (CGI).

The ADB has committed loans of between $600 million to $1.2
billion annually until 2004. However, the high range of the
lending depends on the government's progress in meeting reform
programs.

Another lender, the World Bank, has emphasized Indonesia's
battle with corruption as a yardstick to review the continuation
of its loans.