Indonesia seeks $5 billion in CGI aid

Indonesia seeks $5 billion in CGI aid

JAKARTA (JP): Indonesia is seeking at least US$5 billion in
financial assistance from the World Bank-chaired Consultative
Group for Indonesia (CGI) this year, or at least the same amount
provided in 1995, says a minister.

Minister for National Development Planning Ginandjar
Kartasasmita said Sunday that the government requested Japan in
particular not to reduce its commitment during the donor group's
meeting in Paris on June 18 to June 20.

He said the Indonesian government asked Japan to increase its
loan commitment in yen so that the value of the Japanese loan
would not decline in terms of the dollar.

"In terms of yen, Japanese loans should be increased in order
to meet last year's figure, given the significant appreciation of
the U.S. dollar against the yen since the CGI meeting in June
last year," he told newspeople in Surabaya.

The U.S. dollar has appreciated by about 20 percent against
the Japanese yen to approximately 105 yen to the dollar at
present from 87 yen in June last year.

Ginandjar said he discussed Indonesia's proposal with Japanese
officials on his recent trip to Tokyo, but the Japanese
government had yet to respond to the proposal.

"The appreciation of the U.S. dollar against the yen will be
one of the important subjects to be raised in the coming CGI
meeting," he said.

He assured that the government's decision in February to give
special treatment to PT Timor Putra Nasional to produce a
national car would not affect Japan's loan commitment.

"The Japanese government did not raise any objections related
to the national car project in the meeting," he said.

The Indonesian government's national car project, which
provides tax breaks to Timor Putra, has been widely opposed by
Japanese carmakers, who charge that the project is against the
free trade and investment principles set by the World Trade
Organization (WTO).

The World Bank said recently that it would recommend to CGI
that it provide at least the same amount as last year at their
coming meeting.

The World Bank-chaired group of creditors provided $5.36
billion in financial aid last year.

Japan, the single largest creditor, pledged 187.6 billion yen
($2.14 billion at the rate of 87.5 yen per dollar) last year,
compared to 176.5 billion yen ($1.67 billion, converted at the
prevailing rate) in 1994.

The second largest creditor, the World Bank, cut its
commitment to $1.2 billion last year from $1.5 billion in 1994.

Except for the Asian Development Bank, which raised its pledge
to $1.2 billion last year from $1.1 billion in 1994, most other
government and institutional creditors decreased their
commitments last year.

CGI was set up in 1992 to replace the Inter-Governmental Group
on Indonesia, a donor group coordinated by the Dutch government,
which was dissolved due to Indonesia's disillusionment at what it
saw as Netherlands' persistent intervention in Indonesia's
domestic affairs.

The Consultative Group for Indonesia groups all former members
of its predecessor except the Netherlands, plus five new
creditors -- South Korea, the Kuwait Fund for Arab Economic
Development, the Saudi Fund for Development, the Nordic
Investment Bank and the Islamic Development Bank.

The creditor countries carried over from CGI's predecessor are
Australia, Austria, Belgium, Canada, Denmark, Finland, France,
England, Germany, Italy, Japan, New Zealand, Norway, Spain,
Sweden, Switzerland and the United States. (hen)