RI negotiates use of Singapore loans
JAKARTA (JP): The central bank, Bank Indonesia, clarified yesterday that it would use rupiah derived from Singapore's currency market intervention, not Singapore's promised standby loans, as a loan to support Indonesian businesses.
Bank Indonesia's managing director Paul Soetopo Tjokronegoro told journalists after a working session with the House of Representatives' Commission VIII for state budget and finance that Singapore had pledged a total of US$10 billion in loans to Indonesia.
"The Singaporean loans consist of two segments. One ($5 billion) is to support our balance of payments and the other $5 billion is for rupiah market intervention," Paul said.
He said the $5 billion for the support of balance of payments was bilateral in nature and its withdrawal and allocation were linked to loans from the International Monetary Fund (IMF) as a second-line of financing.
"The disbursement of this loan must be in line with the agreement as it is bilateral and designed to support our balance of payments," Paul said.
But Bank Indonesia said later in a separate statement that talks were proceeding on the use of the $5 billion allocated for exchange rate stabilization.
The usage is being discussed on the use of rupiah funds Singapore would hold after its interventions in stabilizing the Indonesian currency.
"It's being discussed that the usage could be linked to the development of small-scale businesses, cooperatives, labor- intensive industries and exports," the statement was quoted by Reuters and Antara.
Earlier this month, the Monetary Authority of Singapore (MAS) made a joint market intervention with Bank Indonesia and the Bank of Japan to support the rupiah.
Bank Indonesia Governor J. Soedradjad Djiwandono said on Monday's working session with commission VIII that MAS and the Bank of Japan had agreed to intervene again if necessary.
"But we agreed not to announce the size of the intervention for the time being," Soedradjad said, arguing that such an announcement could undermine efforts to stabilize the rupiah.
The statement followed confusion over news reports that President Soeharto had instructed his monetary authorities to disburse a $5 billion Singapore standby loan to medium and big businesses through state banks.
The Monetary Authority of Singapore (MAS) said Monday the loan was intended as a second line of defense to complement the $23 billion in financing assistance from the IMF and associated organizations.
The loan was a back-up facility to support the Indonesian economy and would only be drawn down if other loans from various international financial institutions had been exhausted, Singapore's Finance Minister Richard Hu had said last week.
Soedradjad said loans made under the IMF multi-billion-dollar bailout package would be used to support balance of payments only, not to finance projects like those committed by the Consultative Group on Indonesia (CGI).
"This kind of loan is different from those committed by the CGI. CGI provides loans for project financing, while the IMF loans are for monetary stabilization to support balance of payments," Soedradjad said.
Those categorized as balance of payment support loans also include stand-by bilateral loan commitments linked to the IMF-led $23 billion aid package.
They included a $5 billion bilateral loan commitment from Singapore, $5 billion from Japan, $3 billion from the United States, $1.2 billion from Brunei and $1 billion from Malaysia. (rid)