The Asian Development Bank (ADB) approved a $300 million loan to Indonesia to cover the cost of financial policy changes and give budgetary support for the government stimulus measures, the Manila-based creditur said today.
The loan is for the second phase of the Capital Market Development Program Cluster, which is designed to spur capital markets to provide long-term funding for infrastructure and other critical development needs.
Funds for the loan are from the ADB's ordinary capital resources, it said. The loan has a 15-year term, including a grace period of three years, with interest determined in accordance with the ADB's Libor-based lending facility, according to the statement. The London interbank offered rate (Libor), is the most widely used benchmark rate for short term interest rates.
ADB is providing further financial assistance to Indonesia to support its drive to develop deeper, more liquid capital markets as part of ongoing financial reforms to strengthen the economy, it said in an e-mailed press release.
Asia is leading the world's emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates. Withdrawing these measures too early may derail the global recovery and lead to a protracted slowdown, the ADB said its Asian Development Outlook 2009 Update in September.
Indonesia has a well-developed and well-regulated banking sector that accounts for about 80 percent of the financial industry' s assets. However, its lending capability is constrained by the short- term maturities of its assets, and the non-bank sector, including equity and debt markets, remains relatively small and illiquid.
In its 2009 outlook, the ADB forecast Indonesia's economy will expand 4.3 percent this year, compared with a March estimate of 3.6 percent. In contrast, it expects the economies of South Korea, Taiwan, Hong Kong, Thailand, Malaysia and Singapore to shrink this year.
Monday, November 16, 2009
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