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ADB takes commitment fee on loans to Indonesia
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10:31, August 07, 2009

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Stand by loans prepared by the Indonesian government to anticipate financial crisis in 2009-2010 are attached by commitment fee because the Asian Development Bank as one of the lenders required the fee, the business daily Bisnis Indonesia reported on Friday.

Terms and conditions written in loan agreement document between the Indonesian government and the ADB related to stand by loans show that the government should pay the commitment fee of 0.5 percent a year of non disbursed loans.

"The fee calculation will be effective since 60 days after the signing of loan agreement to dates of disbursement or cancellation," said the document obtained by the daily on Thursday.

Commitment fee is fee charged to debtors by creditors that provide loans demanded by the first party. The fee remains to be charged even though the debtors do not disburse the loans.

Rahmat Waluyanto, the Finance Ministry's director general for debt management confirmed the commitment of the ADB's stand by loan worth 1 billion U.S. dollars.

The ADB is the only stand by loan creditor that charges the fee. Other creditors like the World Bank for 2 billion dollars loan, Japan for 1.5 billion dollars loan and Australia for 1 billion dollars loan do not charge such fee commitment.

However, the World Bank charges front end fee where the government has already paid 5 million dollars while Japan via Japan Bank for International Cooperation charges for guarantee fee that included in loans.

"Loan agreement between Indonesian government and the ADB related to the stand by loans is entering the finalization phase currently. And, we are waiting for formality from Australia (for the loans)," he said.

Indonesia will borrow stand by loans worth 5.5 billion dollars to support the issuance of state commercial papers to fund state budget for 2009 and 2010. The loans would be disbursed if the papers issuance is disrupted by worsening market condition which results in low demand and high yield.


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