Japan considering $1b loan for Indonesia

Japan considering $1b loan for Indonesia

TOKYO (Reuters): Japan is considering extending US$1 billion
in aid to Indonesia in the form of untied loans to help get the
country out of its economic crisis, the Export-Import Bank of
Japan said yesterday.

"We are considering extending a two-step untied loan to
Indonesia...possibly through the Indonesian central bank," a
spokesman for the bank said.

He said the bank was now working on the loan in line with a
Japanese government decision on Feb. 20 to take emergency steps
through trade finance to help stabilize economies of Southeast
Asian nations, particularly Indonesia.

However the bank spokesman said the Export-Import Bank could
not extend the loan to Indonesia before the International
Monetary Fund and Jakarta agree on an economic adjustment
program.

"It is necessary for us to look at the situation with the
IMF," he said, adding that the bank hoped to extend the loan as
soon as possible after such an agreement was reached.

A Japanese economic daily, the Nihon Keizai Shimbun, said
yesterday that the loans would be extended to the Indonesian
central bank to provide a source of revenue for a trade-linked
financial guarantee system, under which firms having difficulties
settling import payments could receive aid.

Additional emergency Japanese aid to Indonesia, which has been
stalled pending negotiations with the IMF, would also be extended
as soon as possible,the paper said.

Indonesia and the IMF have been engaged in discussions about
an IMF-brokered economic reform package, with $3 billion due to
have been disbursed on March 15 delayed by a review of Indonesian
reforms.

Expectations are high that a revised economic reform agreement
will be reached soon.