5.00pm 5 May 1998

Last night (Australian time) the International Monetary Fund (IMF) announced its Executive Board had completed its first review of the Indonesian Stand-By Arrangement. The Board decided that Indonesia can recommence its access to IMF Funding under the Stand-By Arrangement.

At the request of the IMF, the Australian Government will now disburse a US$300 million loan to Indonesia as part of a second tier line of finance. (Australia has pledged to provide loans up to US$1 billion as part of the package and progress is made on structural reform in Indonesia.) Continuing Australian financial support will remain at all times conditional upon Indonesia adhering to the revised program agreed with the IMF.

The assistance will be in the form of a government-to-government loan, which will be provided under the recently amended International Monetary Agreements Act (IMAA). Terms of the loan will be finalised through negotiation. It is anticipated that Japan and Malaysia will also be providing related bilateral support to Indonesia.

Officials from Australia and Indonesia have held preliminary discussions on a loan agreement and are hopeful that these will be concluded in the coming weeks.

The Treasurer said that Australia’s assistance to Indonesia is an investment in Australia’s growth and Australian jobs in the economic recovery of a neighbour and trading partner.

Contact:

Godwin Grech

(02) 6263 2847