INDONESIA STILL NEEDS SOFT LOANS : MINISTER

Jakarta, May 4 (ANTARA) - Indonesia still needs soft loans to finance its poverty alleviation programs and infrastructure development, a cabinet minister said.

"They (international financial institutions) offered us commercial loans while we still need official development assistance (ODA), or soft loans to finance social-safety nets (JPS)," National Development Planning Minister/National Development Planning Board Cheif Paskah Suzetta said here on Monday.

He said Indonesia had become a country with a middle per capita income so that it would be reasonable if its development projects, including a subway system in Jakarta, were financed with commercial loans with higher rate of interest.

"But we also have poverty alleviation programs, social safety net projects and infrastructure development which will have an impact on poverty reduction and for all of this we need ODA loans," the minister said.

He said he had suggested that multilateral financial institutions adopt various funding policies so that Indonesia would also be able to take advantage of i.

The minister said the funding schemes of multilateral institutions were also used as a reference in the extension of bilateral funding schemes, except Japan which was so far still providing Indonesia with soft loans.

"Reforms of the financial institutions require us to also increase our funding capacity through our participation in increasing Asian Development Bank (ADB)'s funds," he said.

On the financing of infrastructure development in Indonesia, he said that because soft loans were small, they could only be used as a stand-by loan.

"Although ADB has given a signal to us that it would provide us with financial support, it would likely be accepted as a stand-by loan and would be disbursed if we really need it," he said.

He said that the government would give priority to funding through the state budget with issuing more flexible bonds, grant funds and funding from a public private partnership scheme.

"We will give priority to using funds from these schemes before using loans," the minister said.*