Japan gives Indonesia 100 billion in cheap loans

JAKARTA (JP): The Japanese government is giving Indonesia 100 billion (US$870 million) in long-term, low-interest loans to help the country cope with its worst-ever crisis.

The loan agreement was signed in Jakarta on Thursday by Takao Kawakami, the Japanese ambassador to Indonesia, and Johan S. Syahperi, the director general for foreign economic relations, at the Ministry of Foreign Affairs.

The Japanese embassy said the loan was the second tranche out of 150 billion, which was pledged by the Japanese government at the Consultative Group for Indonesia (CGI) meeting last July.

"The first 50 billion was disbursed in October, and the government of Japan is considering further assistance in this fiscal year, which ends in March, in addition to this 150 billion sector program loan," the Japanese embassy said.

The soft loan is called Sector Program Loan, which is quickly disbursable, bears a highly concessional annual interest rate of 1 percent with a payment period of 30 years, including a grace period of 10 years.

The embassy said that in response to the serious and prolonged economic crisis in Indonesia, the Japanese government totally shifted its emphasis to quickly disbursable program-type loans, which directly support the socially vulnerable people, from the traditional project-centered loans in this fiscal year.

The 100 billion loan will be used to finance imports of the people's daily needs, it said, adding that the "counterpart fund", which will be accumulated in rupiah by selling imported commodities to the domestic market, will be used for programs helpful for social stability and development. (hen)