The World Bank, one of the country's major donors, has agreed to reserve next year up to US$2 billion as a standby loan for Indonesia to help the country anticipate any economic slowdown resulting from the global financial turbulence, a minister said.

The standby loan will only be taken up by Indonesia if economic growth slows down to 5.8 percent in the first quarter next year, Paskah Suzetta, State Minister of the National Development Planning Agency, said on Thursday.

In the first half of this year, the economy grew by fairly respectable 6.4 percent. The Central Statistics Agency (BPS) will announce the country's third quarter growth data next month.

"The World Bank is willing to reserve a standby loan of $2 billion, from $5 billion proposed by the government," said Paskah in Jakarta, having just got back from a Washington meeting with the Bank's board of directors.

The meeting took place when Paskah was leading the country's delegation to the Annual Meeting of World Bank and the International Monetary Fund (IMF) on Oct. 11-13.

Paskah added the World Bank would help the government raise the rest of the proposed standby loan, the remaining $3 billion, from other countries, through multilateral or bilateral agreements.

"The $2 billion will in fact be sufficient to strengthen the domestic market during this economic crisis," he said. "It will be used, among other things, to finance infrastructural development."

At the same time, Paskah said the delegation also met with representatives from the Asian Development Bank (ADB), Islamic Development Bank (IDB) and the Japan Financial Corporation (JFC).

The meeting with IDB indicated the Jeddah-based bank could give a standby loan in a form of sukuk, or Islamic bonds, bought from the Indonesian government, of $1 billion, Paskah said.

The detailed scheme for the World Bank's standby loan will be discussed next week when the bank has finished reviewing country proposals and its own financial capacity, he explained.

The Bank has received proposals from many countries asking for standby loans to help mitigate the impact of the financial crisis which has increased the prospect of a worldwide recession.

The Bank's standby loan, if eventually taken up by Indonesia, would come on top of annual lending commitments the Bank already provides to the country every year.

This year, under the Consultative Group on Indonesia (CGI) -- a forum which groups together the country's major donors -- the Bank's loans to Indonesia are expected to total $1.4 billion, a modest increase on last year's loan of $1.2 billion.

For next year, the figure is planned to reach $1.9 billion.

Randy Salim, a communication associate of the World Bank in Jakarta, could only confirm that the Bank had received the loan proposal from the Indonesian government, among many other proposals from various countries, but "cannot not state the exact amount as the loan is still in the preliminary phase." (iwp)

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