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Japan to disburse 99 bil. yen loans for Indonesia.

JAKARTA, March 30 Kyodo

Japan exchanged diplomatic notes in Jakarta on Friday with Indonesia to extend 99.1 billion yen in soft loans for six projects, going ahead with the earlier promised aid despite a continued freeze on rescue credit by the International Monetary Fund (IMF).

The IMF continues to shelve the $400 million credit disbursement scheduled for last December due to slow reform efforts. But Tokyo decided to implement the bilateral aid ''needed to stop the Indonesian economy from deteriorating and preventing it from destabilizing the political situation,'' a diplomatic source said.

Japan pledged the yen-denominated loans as part of a $5.33 billion fresh aid package committed by major international donors to Indonesia at a meeting in Tokyo last October.

The Japanese credit includes 41 billion yen in special yen-denominated loans, which Tokyo has set up to help other Asian countries recover from financial crisis and pursue economic reforms with a lower interest rate than ordinary official loans for developing economies.

The special loans will finance a project to improve a key railway in Java.

As for other loans, some funds will go to projects promoted by local governments, but the exchanged notes oblige the central Indonesian government to make all repayments to avoid default.
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Publication:Asian Economic News
Date:Apr 2, 2001
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