U.S. resumes GSM credit for Indonesia
JAKARTA (JP): The U.S. Department of Agriculture (USDA) has resumed its credit guarantee facilities for the importation of agricultural products from the United States.
The USDA announced on Thursday that the GSM-102 credit program, which offers total guarantees of US$400 million for a range of 27 commodities including cotton, soybeans, wheat, soybean meal, wood, pulp and solid wood products is once again being made available to Indonesian importers.
Earlier reports said that Indonesian commodity importers suffered a trade financing crunch following suspension of the credit facility.
The GSM-102 program, which covers U.S. agricultural exporters against nonpayment by foreign buyers, was suspended after a closed Indonesian bank whose liabilities had been assumed by the Indonesian Bank Restructuring Agency defaulted on a payment to a U.S. exporter.
The USDA said that the eligibility of the new credit program had been extended to 38 Indonesian banks.
The credit terms cover letters of credit of 90 days to three years. Freight charges are also included in the guarantee coverage.
The U.S. allocated $400 million for Indonesian trade under the program in 1999, of which over one-quarter was used to purchase cotton, soybeans, wheat and oilseeds.
Many Indonesian exporters are dependent on imports of raw materials for their products. Both exporters and importers have been hit by difficulties in securing trade finance over the course of the financial crisis in Indonesia.(hen)