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Bilateral loans to be reduced

JAKARTA: The government will reduce the withdrawal of bilateral loans and will seek fund from capital market by issuing sovereign bonds to finance state budget deficit.Minister of National Planning Armida Alisjahbana suggested that the policy shall be

JAKARTA: The government will reduce the withdrawal of bilateral loans and will seek fund from capital market by issuing sovereign bonds to finance state budget deficit.Minister of National Planning Armida Alisjahbana suggested that the policy shall be enforced with respect to Indonesia's position as middle-income country.If we obtain donor's aid, we opt for grants rather than direct loans. The government in the future will reduce the portion of bilateral loans, she said yesterday. She also affirmed that the government would make priority of financing activities in progress.The government, as confirmed by Dedi Masykur Riadi, a special staff at the ministry, will go to capital market to raise fund for financing the budget deficit.Data from Finance Ministry shows in March bilateral loans increased by US$1.75 billion, or IDR16.19 trillion (assuming IDR9,250 for a dollar). Moreover, multilateral debts increased by US$1.61 billion.Foreign debts in 2011 increased by 4.29%, compared to that of last year. Bilateral loans also include semi-commercial loans. The country has withdrawn 55% of the total committed US$15 billion loans until 2014.The annual withdrawal of new debt is US$4.3 billion. Through the end of the first quarter this year, the government had tapped 20%.Japan the largestOverall, the largest loans mostly come from Japan, through JBIC (Japan Bank for International Cooperation), according to Deputy of Development Fund at National Planning Agency (Bapennas) Wismana Adi Suryabrata. Other largest providers were World Bank and Asian Development Bank (ADB).Although teh government plans to reduce it, the foreign debt is still needed as a source of development fund, said Wismana. Other Asian countries also withdraw loans from financing institutions. (T04/NOM)

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