Low-interest loans to poor will be paid by January

PALU, Central Sulawesi (JP): The government hopes to complete by next January the first stage of its new poverty alleviation program, which involves administering low-interest loans to 12 million Indonesians for starting their own businesses.

Under a scheme called People's Prosperity Business Credit (Kredit Usaha Kesejahteraan Rakyat, or Kukesra), families will initially receive a modest sum of Rp 20,000 (US$8.70), which will multiply each time it is repaid within four months.

State Minister of Population Haryono Suyono said on Tuesday that officials have begun administering the loans.

From April to June, the first group of 5 million people will receive the loans, said Haryono, following a ceremony here during which he presented loans to 10 families. "By January, all of the 11.8 million people will have received the loans," he said.

President Soeharto administered a Rp 100 billion (US$44 million) loan last January to launch the program, which is now being supervised by Haryono's office.

The program is the second initiated by the President, following his Presidential Aid for Backward Villages (IDT) program, which aimed at attacking poverty at its roots.

The IDT, launched in April 1994, covers areas with large numbers of poor people. Villages not covered by the IDT program will have access to the Kukesra program.

Government figures show that as many as 26 million Indonesians are currently living below the official poverty line.

The Kukesra program is an extension of the government's People's Prosperity Savings campaign, which was designed to encourage poor people to take up the habit of saving money.

Selected Takesra participants must have savings of at least Rp 2,000 to qualify for an initial loan of Rp 20,000.

The borrowers must repay the loan within four months, and strive to double their savings during that period to Rp 4,000.

During the second round, they will be entitled to loans amounting to Rp 40,000. The credit ceiling will gradually increase in line with the growth of their business.

"By May 2,000, all of them are expected to receive the fifth stage of the loan, which is Rp 360,000. They can repay it within a year," Haryono said.

The government has appointed Bank BNI 46 to handle the loans. The bank will work with PT Pos Indonesia -- the state post office company -- whose branches in nearly every village in the country position it perfectly to distribute the funds. (31)