Parliamentary Replies
Published Date: 14 January 1998

Parliamentary Question on Indonesian Loan

Parliamentary question on Indonesian loan

Date:  For Parliament Sitting on 14 Jan 98
 To ask the Minister for Finance what actions can Singapore pursue should the Indonesian government default in repayment of the loan which Singapore extended to them.

1. The US$5 billion loan to Indonesia is a standby facility which will only be used when Indonesia has drawn down their own resources and other loans from international bodies such as the IMF, World Bank and ADB.  Other countries such as Japan, US, Australia, Malaysia and Brunei have also contributed to the standy facility.  As previously stated, it is a second line of defence and to-date, no funds have been disbursed.

2. Secondly, this is a sovereign loan which carries commercial interest rates throughout its tenor.  Indonesia has up to five years to repay.  We do not expect Indonesia to default on their loan obligations.  The country has never defaulted on such loans.  They are a fellow ASEAN member with abundant natural resources.  At end-1996, the annual GDP of Indonesia was US$228 billion.  This is more than twice Singapore's GDP.

3. In the event that cashflows do not permit repayment on schedule, the matter, in the spirit of ASEAN, will have to be resolved through consultation and by mutual agreement between the two countries.  On the other hand, if conditions improve sooner than expected, Indonesia has the option of early repayment.