Singapore clarifies loan to RI

Singapore clarifies loan to RI

SINGAPORE (Reuters): Singapore's US$5 billion loan for Indonesia is intended as a second line of defense to complement other aid, the Monetary Authority of Singapore (MAS) said yesterday.

The MAS was responding to requests for comment on reports that Indonesian President Soeharto had said the Singapore funds would be distributed to Indonesian businesses through loans.

A statement in response from an MAS spokesman said:

"As Singapore's Minister for Finance Dr Richard Hu has stated in parliament, Singapore's offer of a standby credit line of US$5 billion is a 'second line of defense' to complement the US$23 billion financing assistance from IMF (International Monetary Fund), World Bank and ADB (Asian Development Bank), plus Indonesia's own foreign reserves."

The statement gave no other details.

Hu said last week the loan was a back-up facility to support the Indonesian economy and would only be drawn down if the loans from the three institutions had been exhausted.

He said the loan would be offered for up to five years in tranches of $1 billion each to be drawn at the request of the Indonesian government.

Businessman Aburizal Bakrie, Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), who traveled with Soeharto on a visit to South Africa, said on Friday President Soeharto had ordered monetary authorities to disburse the fund to businessmen through loans repayable at 17 percent interest per year.