KL cancels $1b loan to RI

KL cancels $1b loan to RI

KUALA LUMPUR (Dow Jones): Malaysia, burdened by its own economic problems, has canceled its offer to provide a US$1 billion loan to Indonesia, Second Finance Minister Mustapa Mohamed was cited as saying by the national news agency Thursday.

The Malaysian government was forced to cancel the loan as a result of the economic slowdown which had set in since September last year, Bernama news agency reported him saying in Parliament.

Malaysia expressed its intention in Oct. 1997 to help Indonesia climb out of its economic doldrums, supporting the spirit of the Association of Southeast Asian Nations, Mustapa reportedly said.

Since the economic slowdown set in, Malaysia had borrowed a total of some 17.7 billion ringgit to finance various development projects, Mustapa said.

He said some 60 percent of the borrowings came from Japan, according to the agency.