Soleh says Rp 11.3b of farming loans misused

JAKARTA (JP): Minister of Agriculture Soleh Solahuddin acknowledged on Monday official misuse in the disbursement of heavily subsidized farming loans, but contended the incidence was less than 1 percent.

He said his ministry found that Rp 11.3 billion (US$1.5 million), or about 0.24 percent, of the Rp 4.7 trillion disbursed to farmers was misused by "officials".

But a visibly angry Soleh denied the incidence reached 40 percent of the loans, which was reported earlier this month by an official from Bank Indonesia (BI), the central bank.

"The amount misused is only 0.24 percent of the total farming loans disbursed to farmers. We have been cooperating with the provincial administrations to prevent more abuse," he said.

He added that the cases of embezzlement were found in 13 provinces, with the highest incidence in North and South Sulawesi, North Sumatra and provinces in Java.

Head of BI's credit section Karim Abubakar said last week that his office found that 40 percent of the farming loans were misused for other activities, including for financing "money politics" before the general election on June 7.

Karim denied BI officials were involved because the central bank was only in charge of the disbursement of the chief credits to channeling banks.

Deviations, he added, would have occurred during the disbursement of credit from the channeling banks to farmers, a procedure which involved officials of the Ministry of Agriculture.

Soleh was annoyed by the central bank official's charge, saying it slandered his subordinates.

"We want BI to transparently reveal its findings and, if they could not be proved, we want the official to be sanctioned for spreading such defamation," he said.

The government planned to disburse about Rp 7.6 trillion in heavily subsidized farming loans in the 1998/1999 planting season ending in September to help farmers and encourage them to plant more crops.

The minimum value of subsidized farming loans is Rp 2 million per hectare. It carries a 10.5 percent interest rates per annum -- far below the current commercial interest rates of 23 percent per annum -- to encourage farmers to take advantage of the scheme.

Soleh said about Rp 4.7 trillion of the farming loans were disbursed, with the remaining Rp 2.9 trillion to be disbursed until September.

He added that the government planned to disburse another Rp 9.4 trillion for the 1999/2000 planting season, which will start in October.(gis)