The World Bank has approved two Development Policy Loans (DPLs) amounting to 800 million U.S. dollars to add momentum to Indonesia's pro-poor reforms and infrastructure program, said a statement released by the bank on Tuesday.
The 600-million-dollar Fourth Development Policy Loan and the 200-million-dollar First Infrastructure Development Policy Loan bring together the Asian Development Bank, the Japanese government and the World Bank on a common platform to support Indonesia's growing reform agenda, said the statement.
These low-cost loans are part of the Indonesian government's strategy to reduce the country's debt levels, which have been declining the fastest in East Asia from 80 percent of the GDP in 2000 to 35 percent by December 2007, and to make use of the lowest cost options for meeting financing requirements, according to the statement.
"The DPL program reflects the mature relationship between Indonesia and its international development partners," said Joachim von Amsberg, the World Bank's Country Director for Indonesia.
"With continued progress on these reforms, Indonesia can achieve even higher and more broad-based growth that would lead to rapid poverty reduction," he added.
These new loans have no commitment fees, which were abolished as part of a broader reform to reduce and simplify World Bank loan pricing in September 2007.
They also carry significantly lower interest rates and longer maturity than private financial market borrowings, allowing Indonesia to save in total debt service payments over the life of the loans, according to the World Bank.