Standby Loan Facility May Be Extended to 2011
Indonesia may extend the remaining unused US$4.75 billion in standby loans by a further year to 2011 as the country may not use all the facility for budget financing during 2010, the Finance Ministry says.
The government has received $5.5 billion in standby loans, sometimes referred to as deferred drawdown options (DDOs), from the Australian government ($1 billion), the Japanese government ($1 billion), the Asian Development Bank (ADB) ($1.5 billion) and the World Bank ($2 billion).
Of the $5.5 billion set aside, Indonesia has so far used only $750 million to guarantee its first ever issue of yen-denominated bonds (samurai bonds) in Japan, Finance Minister Sri Mulyani Indrawati told a press conference Wednesday.
“DDOs can be used in 2010 if needed. They may even be extended to 2011, as in 2010 the deficit may tend to be smaller [than that in 2009],” she said.
This year, the budget deficit is estimated to reach Rp 129.8 trillion (US$12.77 billion), or 2.4 percent of the GDP — while in 2010 it is predicted to be lower at only Rp 98 trillion, or 1.6 percent of GDP.
The government resorted to the possible use of standby loan facilities to help the country cope with the global financial crisis.
Now with the world seeing signs of recovery, the government is upbeat that the country is already heading towards a full recovery as early as next year.
To help keep the momentum going, Mulyani also said that at the upcoming G20 meeting (between finance ministers and central bank governors) on Sept. 4-5 in London, Indonesia would push member countries for a good exit strategy from the global economic crisis to avoid hurting emerging economies.
“Indonesia will be pushing for this so that the exit strategy will be done consistently in the medium term, so it will not hurt emerging countries,” she said.
This week’s G20 meeting in London will be a preliminary meeting to the G20 summit in Pittsburgh from Sept. 24 to 25, when heads of state are set to attend.
Source: The Jakarta Post
