Many foreign-funded development projects have not commenced due to the delay in the disbursement of loans, a senior Finance Ministry official said.
“There are 42 loan packages pledged by foreign donors that have not been disbursed,” Finance Ministry Debt Management Director General Rahmat Walujanto said last Thursday evening.
The Finance Ministry says only about US$5 billion (40.4 percent) of the $12.56 billion in project-based loans pledged for 185 projects had been disbursed.
Meanwhile, only $1.63 billion or 30.93 percent of the total $5.3 billion of foreign loans under the sub-loan agreement (SLA) had been disbursed. The undisbursed loans include credit facilities for defense equipment procurements (Alutsista).
Rahmat blamed three factors for the delay: delayed approval of projects, protracted procurement process, and a delay in lender’s approval.
Finance Ministry loan and grant director Maurin Sitorus said a loan could only be disbursed after its agreement had taken effect. Two main requirements need to be fulfilled to render a loan agreement effective.
The loan agreement had to have a legal opinion from the Justice and Human Rights Ministry for bilateral and multilateral loans and from the chairman of the legal bureau at the Finance Ministry for commercial loans.
Related ministries and state institution should also provide a 15 percent down payment on the project to be financed by the loan.
Maurin added that in some cases, loan agreements might need proof of authority from the Finance Ministry directorate general of debt management.
However, even after the agreements take effect, he said, many loans cannot be disbursed if there was a lack of progress in the projects. (ebf)
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