Yen loans to RI eased

Yen loans to RI eased

TOKYO (Dow Jones): Japan will reduce the interest rate on yen loans to Indonesia to help ease liquidity pressures on the Southeast Asian country, government officials said in the Nihon Keizai Shimbun's Sunday edition.

Interest rates on so-called "structural adjustment" loans -- a new type introduced in April to help countries experiencing sharp currency devaluations -- will be set at 1.0% rather than the 2.2% usually charged on loans to Indonesia. Interest rates on loans for development projects will fall from 2.2% to 1.8%.

The structural adjustment loans are designed to help local importers assist with their import settlements.

The new conditions will apply to 50 billion yen (Y) of loans pledged in January but not yet disbursed because of the political turmoil in Indonesia. The Japanese government intends to provide Indonesia with the money in July, when the International Monetary Fund is due to resume loans to the country.

Japan may also offer a further Y50 to Y100 billion in loans by March 1999.