Jakarta 'won't default' on loan
Straits Times. Jan 15, 1998
Related: Absurd'
to require parliament approval all the time
INDONESIA is a fellow member of Asean and a country with abundant
natural resources, so the government does not expect it to default on its
US$5 billion loan from Singapore, Finance Minister Richard Hu said yesterday.
He noted that its gross domestic product in 1996 was $228 billion, more than twice Singapore's GDP, and said: "We do not expect Indonesia to default on its loan obligations. The country has never defaulted on such loans."
He made the point in answer to Mr Low Thia Khiang (Hougang), who asked what Singapore would do if Indonesia defaulted on the loan.
Replying, Dr Hu said the US$5 billion loan was a second line of defence and, to date, no funds had been disbursed.
Singapore made the offer late last October to help stabilise the Indonesian economy. Japan announced a similar loan at the same time.
Dr Hu stressed that the loan carried commercial interest rates throughout its tenure, and Indonesia had five years to repay any drawdowns.
He added that the loan was part of a standby facility which would be used only when Indonesia had drawn down its own resources and other loans from international bodies such as the International Monetary Fund, the World Bank and the Asian Development Bank. Other countries such as Japan, the United States, Australia, Malaysia and Brunei had also contributed to the standby facility.
To another question from Mr Low as to whether there was collateral,
he said: "This is a sovereign loan which doesn't require security.
You do not pledge a country to secure a loan. You don't."
See also:Concern about
loan offer to Indonesia