Govt, CGI to meet on Friday

The Jakarta Post, Jakarta

The government and Indonesia's main creditor countries under the Consultative Group on Indonesia (CGI) will meet on Friday to discuss additional loans to cope with an expected budget blowout next year in the wake of the Oct. 12 Bali bombing.

The informal meeting sets the ground for CGI's annual meeting, which was delayed to early January from late October because of the terrorist strike.

The government had expected loans of less than US$3 billion but now said it would need more to cope with falling revenue as the attack had worsened the country's economic outlook.

Media reports have speculated the government may ask for an additional $420 million to bring the total loans to around $3.2 billion.

Finance Minister Boediono said on Monday that next year's deficit target would increase not only because of falling state revenues but also as the government needed to stimulate the economy with more development spending.

Indonesia's biggest bilateral creditor, Japan, has indicated its willingness to raise its aid, though is not sure by how much.

The World Bank, which chairs the upcoming CGI meeting, has said international creditors should help Indonesia but added the government should pursue economic reforms more aggressively to mitigate the Oct. 12 impact.