IDB sets aside $443m for RI tsunami assistance package

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.