Japan provides new $158 million loan to Jakarta

JAKARTA (JP): The Japanese government has agreed to provide a 20 billion (US$158 million) quick disbursement loan to support Indonesia's human resource development.

The new loan, in the form of a sector program loan, was handed over yesterday by Japanese Ambassador Takao Kawakami to Director General for Foreign Economic Relations Soemadi D.M. Brotodiningrat.

The loan supplements a 195.2 billion ($1.5 billion) overseas development assistance package announced by Japan during the Consultative Group for Indonesia's (CGI) sixth meeting last June in Tokyo.

Kawakami said part of the new loan would be used to finance small projects for education and human resources development training, social welfare and health care.

The loan is payable in 30 years, including a grace period of 10 years, with an interest rate of 2.2 percent a year.

The ambassador said the Japanese government decided to issue the quick disbursing loan in consideration of Indonesia's efforts to promote structural adjustments while experiencing unprecedented economic difficulties.

Indonesia is suffering its worst economic crisis in decades.

Soemadi said the loan would be used to help improve the country's economic structural adjustments.

He added that human resources would be given priority, while poverty eradication and health improvements followed closely in importance.

Japanese Vice Foreign Affairs Minister Masahiko Koumura promised President Soeharto in January that his government would provide a 50 billion fast disbursement loan for the 1998/1999 fiscal year to help fund labor-intensive projects.

Japan is the largest single creditor to Indonesia. For the 1997/1998 fiscal year, Japan pledged 215.2 billion in new soft loans through the CGI creditor consortium to Indonesia, despite its plan to slash its official development assistance (ODA) worldwide by 10 percent.

Indonesia received 190.1 billion in Japanese ODA loans in 1996/1997 and 170.1 billion in 1995/1996.

The embassy said the 20 billion loan is a part of Japan's recently announced economic aid package for Indonesia.

Japan is also participating in an International Monetary Fund- led rescue package for Indonesia worth $43 billion. (gis)

Table: Japan's ODA for Indonesia as of March 3 (in billions of yen)

(Fiscal Year; Yen Loan; Aid Grant; Technical; Cooperation): (1995/1996; 170.1; 6.7; 12.0), (1996/1997; 190.1; 7.2; 11.5), (1997/1998; 215.2; 7.9; Not available).