ADB offers new loan scheme to Indonesia

The Asian Development Bank (ADB) has offered a new loan scheme to the Indonesian government, and currently, both parties are still reviewing the potential financing that can be availed through it.

Development Financing Deputy of the Indonesian National Development Planning Agency (Bappenas) Wismana Adi Suryabrata stated that the newly offered scheme is different from the earlier three schemes of result-based lending, direct lending, and conventional loans.

“They are offering the loan based on the need to fund projects in the state budget. So, it is not similar to procurement, but when the project is completed and there is still a shortage of funding, then they can cover it,” Wismana explained here on Friday.

Wismana noted that the loan scheme is directly based on the matrix of infrastructure projects in the state budget, and it is a new scheme that has not yet been offered to other multilateral or bilateral financing institutions and partners.

Indonesia will benefit from the governments criteria for the projects under this new scheme. Moreover, the government has received assurance for additional sources of funding if there is a shortage of funds to finance any government infrastructure projects.

“This new scheme is only for infrastructure projects,” Wismana stated while referring to the ADB, which is also expanding its role to finance social and environmental projects.

However, the Indonesian government and ADB are still formulating other provisions in this new scheme, Wismana added.

Currently, the ADB is offering a lending rate of 1.2 percent, with a five-year grace period and a repayment tenor of 20 years.

Previously, the ADB had increased the loan limit to Indonesia in 2014, when it had disbursed funding worth US$710 million.

The loan was then increased to US$1.5 billion.

In 2016, the ADB has committed to lend US$2 billion to Indonesia.