RI receives US$2.4b loans from Japan

RI receives US$2.4b loans from Japan

JAKARTA (JP): The Japanese government agreed on Friday to
provide Indonesia with US$2.4 billion in loans to help finance
the country's 1999/2000 budget deficit.

Japan's vice finance minister for international affairs,
Eisuke Sakakibara, said that a substantial part of the money
would be released before the June general election.

"This financial package is only the first part of the Japanese
government's assistance to Indonesia under the Miyazawa Plan,"
Sakakibara told reporters after a meeting with President B.J.
Habibie.

Sakakibara said his government would consider providing
additional aid at the next meeting of the Consultative Group on
Indonesia (CGI) in Paris in July.

The $30 billion Miyazawa Plan was promised last year by
Japanese Finance Minister Kiichi Miyazawa to help revive the
Southeast Asian region's crisis-hit economies.

Coordinating Minister for Economy, Finance, and Industry
Ginandjar Kartasasmita said Indonesia was the largest recipient
of aid in the first phase of the Japanese initiative.

Thailand has received $1.8 billion, Malaysia $1.5 billion and
the Philippines $1.4 billion.

Indonesia will need approximately $10.3 billion in foreign
loans to finance the 1999/2000 state budget.

Before Friday, the government had secured $4 billion in
project financing loans, leaving a shortfall of $6.3 billion.

With the confirmation of $2.4 billion from Japan, the
government must now secure $3.9 billion, which Ginandjar said he
hoped would be pledged by donors grouped in the CGI at its July
gathering.

The CGI groups Indonesia's donor countries and institutions
including Japan, the World Bank and the Asian Development Bank
(ADB).

"Probably at the CGI meeting, which will be held in the
summer, we could discuss additional measures that we can take,"
Sakakibara said.

He promised to continue looking into Indonesia's financial
needs and said he would consider providing further assistance,
including short-term financial aid.

Ginandjar had earlier said he expected Japan to provide at
least $3 billion, with the World Bank and the ADB each providing
$1 billion.

"$2.4 billion out of a $3 billion request, I think, is quite a
good number," Sakakibara said.

Ginandjar said the President expressed his thanks, saying he
was deeply touched by the Japanese support and that it had been
very timely in its arrival.

Ginandjar expressed optimism that the shortfall in the budget
would be fully covered by new aid pledged at the CGI meeting.

"However, it would be unfair to put all the burden of
financing our budget on Japan," Ginandjar said.

"We are also going to ask the ADB, the World Bank, the IMF and
other donors to support our economy," he said.

At a preliminary gathering of CGI representatives in Jakarta
last month, the World Bank warned the government to remain true
to its program of economic reform if it wanted to retain the
support of the international community.

Worries over the program of reform have surfaced as a result
of the political debate raging over the bank recapitalization
program.

"The recapitalization of the banks is crucial to the recovery
of the Indonesian economy," Sakakibara said. "So we support the
efforts of Indonesian government to recapitalize their banks. Of
course, it has to be done in a very transparent and fair manner."

Sakakibara also commended the government for its efforts to
combat corruption in the country.

Miyazawa said in a statement that $1.5 billion of the $2.4
billion loan would be provided by the Export Import Bank of
Japan, with the remaining $900 million coming from the Overseas
Economic Cooperation Fund.

He also said that Japan would help to subsidize Indonesian
interest payments on a loan of $620 million provided by the ADB.
(rei/prb)