Malaysia loans Indonesia $250 million

Malaysia loans Indonesia $250 million

KUALA LUMPUR, Malaysia (AP): Malaysia has loaned Indonesia US$250 million while Jakarta waited for the next installment of its IMF bailout package, Prime Minister Mahathir Mohamad was quoted as saying by the national news agency yesterday.

Indonesia would repay the loan once the International Monetary Fund released the balance of its rescue package, Mahathir said in the Egyptian capital, Cairo, where he is attending a summit of developing countries. Indonesia's President Soeharto is also attending.

"We cannot interfere in our neighbor's affairs but we will help as much as we can," he was quoted as saying.

His comments were made Sunday to reporters during a meeting with Malaysian students at the Malaysian ambassador's residence, Bernama news agency said.

The IMF said last week, after voting to resume lending to Indonesia as part of its $43 billion economic reform package, that nearly $7 billion will be available to the country by the end of the month.

Asia's economic crisis has hit Indonesia harder than any other country. The IMF has demanded strict economic reforms in exchange for a bailout. IMF-demanded cuts in fuel subsidies this week sent gasoline prices up 71 percent, triggering street riots.

Indonesia urgently needed the assistance as its economy was in dire straits, Mahathir was quoted as saying said. "We also want to know what else we can do," he said.

Last year, soon after the currency crisis hit Southeast Asia, Malaysia loaned Indonesia 1 billion ringgit ($263 million).

Although Malaysia is also reeling from the effects of drop in currency values, it refuses to seek funds from the IMF like Indonesia, South Korea and Thailand, which together received more than $100 billion.

It says conditions that come with the aid would rob the country of its independence. The IMF demands full scrutiny of a country's economic policies in return for aid in addition to cuts in subsidies.