Govt seeking easier CGI lending terms

Govt seeking easier CGI lending terms

The Jakarta Post, Jakarta

The government is seeking easier lending terms at the upcoming
Consultative Group on Indonesia (CGI) donors meeting, a senior
government official said on Wednesday.

Koensadwanto Inpasihardjo, the secretary of the offices of the
State Ministry of National Development Planning/Bappenas, was
quoted by detik.com as saying that all related ministers should
strive to obtain a lower commitment fee from the donors group.

He said that Indonesia had been paying a commitment fee of 1
percent on all its loans each year, although the loans were not
always fully disbursed to the country. The government has to meet
certain conditions to obtain those loans.

He was speaking on the sidelines of a meeting with the House
of Representatives state budget committee.

The upcoming CGI meeting will be held in Yogyakarta on Oct. 28
and Oct. 29. This will be the first meeting to be held outside
Jakarta.

CGI groups Indonesia's traditional donors, comprising 21
countries and 11 multinational lenders. The World Bank is one of
the main creditors.

The lenders of the group pledged financial support to the
country last year totaling US$3.14 billion in loans and $568
million in grants and technical aid to mostly help cover the
state budget deficit.

Of that total, $1.3 billion was tied to the country's progress
on policy performance, concerning poverty reduction and good
governance.

However, the government often cannot fully tap the pledged
loans because of its failure to meet the necessary conditions set
out by particular lenders.

It is not yet clear how many new loans the government will ask
for from the CGI, but according to one estimate, it would be in
the range of $2 billion to $2.5 billion to help finance the 2003
state budget.

The state budget draft is being debated with the House budget
committee.

The cash-strapped government has no other choice but to ask
the CGI for easier terms for this year's loan commitment in order
to help ease pressure on the state budget, which is heavily
burdened from the huge cost of the government-sponsored bank
bailout program in the late 1990s.