Japan to

Japan to
offer
new aid
for RI

The Jakarta Post
Jakarta

Japan Prime Minister Junichiro Koizumi will offer Indonesia
new aid to support the country's economic recovery, when he meets
President Megawati Soekarnoputri in Jakarta tomorrow, said
foreign minister Hassan Wirajuda on Thursday.

But a senior official at the Japanese Embassy ruled out the
possibility of Japan pledging new loans during Koizumi's visit.

"As part of his (Koizumi) visit, various new commitments will
be presented," Hassan told reporters after a Cabinet meeting.

Koizumi is to arrive in Jakarta on Saturday as part of his
seven-day tour covering Southeast Asian countries.

Hassan said one key point on the agenda for discussion during
his visit here was ways to expedite Indonesia's economic
recovery.

"There will be talks on getting together the details for
Japan's support," he said.

Japan is the biggest bilateral creditor to the country, and
among Indonesia's most important trade partners.

However, Koizumi's visit to Jakarta comes at a time when Tokyo
is mulling over slashing its financial aid to Indonesia.

Mired in recession, Japan has considered reviewing its
Official Development Assistance (ODA) policy toward Indonesia.

Signs of this surfaced when Japan cut its loan pledge under
the Consultative Group on Indonesia (CGI) to $720 million from
$1.56 billion at the previous CGI meeting.

Japan along with the World Bank and the Asian Development Bank
have been the biggest contributors under the CGI, which groups
together Indonesia's sovereign creditors.

Now, instead of spending more, Tokyo has shown signs of
leaning toward receiving less from Indonesia under more generous
debt restructuring terms.

Japan has said it provides about one third of all Indonesia's
external financing needs, estimated at some $7 billion this year.

As only $720 million was pledged under the CGI forum, most of
its support would likely come through debt restructuring talks at
the upcoming Paris Club meeting.

First Secretary for financial affairs at the Japanese Embassy,
Hiroshi Ogushi said there were no plans for new loans outside
those pledged under the last CGI meeting.

"There are many other ways to cooperate," he told The Jakarta
Post, adding the new aid programs were being finalized.

He declined to elaborate on them, but cited they might also
cover noneconomic aid programs.