RI expects $5b in foreign loans this year

JAKARTA (JP): Indonesia expects to get about US$5 billion in new foreign loans from its creditor consortium this year, State Minister for National Development Planning Ginandjar Kartasasmita said yesterday.

Ginandjar said he hoped Indonesia's controversial national car policy would not hurt its ties with key donor nations or affect their new loan commitments to Indonesia.

"We expect to get foreign loans at a similar level to last year's, or around $5 billion," Ginandjar said after meeting President Soeharto.

He said the funds would mainly be used to improve human resource development, infrastructure and alleviate poverty.

The funds will come from the World Bank-chaired Consultative Group for Indonesia (CGI), which consists of 20 donor countries, including Japan, and several financing agencies.

CGI pledged US$5.26 billion in financial aid to Indonesia last year and $5.36 billion in 1995.

Ginandjar said he would fly to Japan this weekend to propose sectors and projects for foreign loan financing, especially from Japan.

CGI will for the first time meet in Tokyo in the middle of next month. The creditors have held their annual meeting in Paris since 1992.

Japan has been the largest single creditor for years. It's aid commitment to Indonesia stood at $2.16 billion last year and $2.14 billion in 1995.

Ginandjar said Indonesia would offer 22 projects to Japan to finance.

The other big creditors are the World Bank and the Asian Development Bank. Together with Japan, they contribute some 80 percent of CGI's total loans to Indonesia.

Indonesia is one of the world's largest debtor countries, with outstanding foreign debts of over $110 billion.

But the government's portion has been decreasing to some 50 percent of the total foreign debts outstanding, from the previous 60 percent, due to the early-amortization of debts with high interest rates.

Ginandjar yesterday said again that bilateral loans secured from the CGI were mostly soft loans.

"But as we are now classified as a middle-income country, we may not get as many soft loans as we want. That's why we have to become more self-reliant in financing our development," Ginandjar said.

Ginandjar said he would not raise the issue of Indonesia's national car policy with Japan but would be ready to answer any questions on the issue if raised by Tokyo.

"I hope the national car policy will not disturb or affect economic relations between Indonesia and Japan, especially in the CGI. I don't think it has hampered relations yet," he said.

Indonesia's national car policy gives PT Timor Putra Nasional, headed by President Soeharto's youngest son Hutomo Mandala Putra, three-year tariff and tax breaks to produce a national car in association with Kia Motors Corp of South Korea.

Japan, the United States and the European Union have said the policy discriminates against other car manufacturers and have taken their complaint to the World Trade Organization. (rid)