IDB sets aside $443m for RI tsunami assistance package
Leony Aurora, The Jakarta Post/Jakarta
The Islamic Development Bank (IDB) will extend a US$443 million tsunami assistance package to Indonesia, pending the completion of the government's final assessment of its post-tragedy financing needs, a bank executive says.
IDB vice president Amadou Boubacar Cisse told The Jakarta Post on Friday the package, comprising an emergency relief grant, soft loans, ordinary loans and import credits, had already been approved.
"We are ready (to disburse the funds)," he said. "The government is in the driver's seat now. We'll follow their strategy and action plan."
Cisse said the bank recognized the necessity of simplifying procedures to ensure these resources could be given "as early as possible".
A group of experts from the National Development Planning Agency will depart this weekend for Aceh and North Sumatra to assess the damage caused by the recent earthquake and tsunami.
The IDB previously announced it had prepared a package of $500 million for all of the disaster-affected countries.
Aceh has been the worst affected area by the catastrophe, with more than 100,000 dead and much of its infrastructure destroyed.
Indonesia will receive $3 million in grants from the IDB for immediate humanitarian relief.
"This money has already begun to be disbursed," said Cisse.
The bank, which operates under the Islamic sharia system that prohibits interest being charged for financial transactions, also is offering $50 million in soft loans and $160 million in ordinary loans.
The soft loans come with a service fee equivalent to an annual interest rate of under 1 percent, while the ordinary loans carry a repayment fee equivalent to interest of about 3 percent per year. Both types of loans, which would be used to fund reconstruction projects, will have to be repaid in between 25 years and 30 years.
Cisse said it was too early to determine when the project funds would be delivered. "We assume that for the reconstruction, (the disbursement) may take one or two years," he said.
The IDB also will provide $230 million in import credits that can be used to enable the importing of essential products for Aceh's reconstruction.
Aside from the Aceh relief funds, the bank will maintain its current programs in Indonesia under a three-year cooperation ending in 2006.
The IDB reported last year that the government and the private sector of Indonesia absorbed less than 30 percent of $500 million loans extended by the bank, due to problems related to regional autonomy.
The IDB, which was established in 1973 by the member countries of the Organization of the Islamic Conference, funded last year trading activities conducted by state oil and gas company PT Pertamina, steel mill PT Krakatau Steel and chemical manufacturer PT Petrokimia.
The bank also made a preliminary commitment to provide working capital of between $15 million and $60 million to aircraft manufacturer PT Dirgantara Indonesia.