Government Arranges Infrastructure Credit
Tuesday, 19 June, 2007 | 16:32 WIB

Tempo Interactive, Jakarta: The government will arrange domestic banking to finance infrastructure development.

The policy will be included in the Government Regulation on Domestic Loans. This is a continuation of the Economic Policy for Advancing the Real Sector and Empower the Establishment of Micro, Small- and Medium-scaled Enterprises (SME).

“The government will decide the types and the time projects can be financed by domestic bank loans because in the end this will relate to the State Budget,” said the Head of the National Development Planning Agency (Bappenas), Paskah Suzetta, during the working meeting with the House’s Commission for Finance and Banking, in Jakarta, yesterday (18/6). The projects to be financed must be strategic and be able to bring a profit for the state such as infrastructure and weapons projects.

According to Paskah, the financing of infrastructure projects takes years. Thus, the government needs many sources of development financing. “The financing takes many years. So we can’t only rely on the State Budget,” he said.

Although the risks are higher, financing from domestic banks is easier compared to foreign banks. “Just don’t disrupt the sector outside the government,” he said.

The government will also analyze the credit portion that can be given for the development projects. “It will be calculated. Don’t let everything be absorbed by the government and private sector. It will destroy the real sector. The provision for balance will be made,” he said.

In terms of credit interest, Paskah confirmed he will set the commercial interest rate. However, the number is smaller than loans in the form of foreign currency. “Rupiah loans are of lower risks compared to foreign currency,” he said.

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