RI requalifies for World Bank soft loan facility

JAKARTA (JP): The World Bank has agreed in principle to once again make International Development Assistance (IDA) interest- free, soft loans available to Indonesia because the economic crisis has dragged the nation back down into the ranks of low- income countries, a senior minister has said.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said here on Monday that at an exchange rate of Rp 8,000 to the U.S. dollar, Indonesia's per capita gross domestic product now stands at around US$400, down from a pre- crisis level of over $1,000.

"We are once again eligible (for IDA loans). We now have the right to ask for this type of assistance," he told reporters after opening a seminar on human resources organized by Universitas Darma Persada.

"It will be of benefit to us if we can have loans with softer terms than previous ones. The World Bank has agreed to this," he added. He declined to provide further details, saying that the National Development Planning Board (Bappenas) was still studying the matter.

Loans issued under the World Bank's IDA scheme have a 40-year repayment period, including 10 years of grace period, and do not charge interest but only administrative fee. They are made available to countries with a per capita income below $900.

Ginandjar explained that Indonesia first received IDA loans in 1968, but lost its entitlement to this type of assistance when it jumped from the ranks of low-income countries to the group of middle-income nations, as classified by the bank.

The sharp depreciation of the rupiah against the U.S. dollar precipitated by the Southeast Asian monetary crisis has more than halved the country's per capita income.

"Whatever things that can lighten the burden on our economy in the future have to be done," Ginandjar said.

He explained that the decision to ask the Paris Club for debt rescheduling had been based on the same consideration.

The government reached a deal with Paris Club creditor nations in September in which $4.2 billion of Indonesia's $52 billion sovereign debt was rescheduled to allow the country to focus on financing programs of economic reform and divert resources to help the poor through the economic crisis.

"Some people thought that rescheduling our debt was a disgrace. We must not think that way because in the current situation we have to save our foreign exchange earnings," Ginandjar said.

"It's the same with IDA loans. If we can get soft loans, what's wrong with that? It's greatly helpful to get interest-free loans at this point in time," he pointed out.

Asked to confirm rumors that the International Monetary Fund (IMF) intends to postpone bailout assistance to the country as a result of continued rioting, he said: I haven't heard of that (the rumors). The first time I heard it was from you.".

He added that he felt sure the IMF would continue to support the country.

"I don't think it (the riots) will have any affect (on the disbursement of IMF loans)," he said.

At least 13 people died in the latest outbreak of rioting, which erupted in West Jakarta on Sunday. A number of churches were attacked and set on fire during the unrest.

On Nov. 13, clashes between antigovernment protesters and security personnel in the capital left 15 people dead and on the following day, Saturday 14, mobs looted and burned a number of commercial and residential properties. (rei)