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Japan signs loan agreements, resuming aid to Indonesia.

JAKARTA, Jan. 25 Kyodo

The Japan Bank for International Cooperation (JBIC) on Tuesday signed two loan agreements with the Indonesian government totaling 83,428 million yen under Japan's aid package for Asian nations. The loan package, to be extended jointly with the World Bank, consists of 71,928 million yen to support the socially handicapped and 11,500 million yen to help Indonesia improve its international balance of payments.

The agreement is the last phase of contracts with Indonesia under the aid package unveiled by Japanese Finance Minister Kiichi Miyazawa in October 1998 to provide a total of 30 billion dollars for Asian countries hit hard by the region's financial crisis that broke out in summer 1997.

In February last year Tokyo promised to extend 2.4 billion dollars to Indonesia and pledged to extend an additional 380 million dollars at a meeting of donor nations to Indonesia in July. Of the 2.78 billion dollars, Tokyo has already disbursed 1.23 billion dollars.

Tokyo suspended extending the remaining portion in line with the International Monetary Fund's decision to stop loans to Indonesia as the remaining portion is to be extended in syndicated loans with the IMF and the World Bank.

The IMF suspended loans to Indonesia in August last year after allegations surfaced that the then ruling Golkar Party of former President B.J. Habibie funneled IMF funds from the Bank of Bali to the election coffers of the party.

Japan has decided to resume the aid as Indonesia reached an accord with the International Monetary Fund on its new economic reform program earlier this month.

JBIC is a governmental financial institution to execute Japan's external economic policy and economic cooperation.
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Publication:Asian Economic News
Date:Jan 31, 2000
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