Asian Development Bank (ADB) President Mr. Takehiko Nakao met with Indonesian President Mr. Joko Widodo today and conveyed his condolences to Indonesia and the people affected by the devastating earthquake and tsunami in Central Sulawesi, Indonesia. Mr. Nakao pledged up to $1 billion for emergency assistance to support immediate budgetary needs and reconstruction efforts in the affected areas.
In the meeting with President Widodo, Mr. Nakao commended Indonesia’s sound macroeconomic management. He emphasized that Indonesia’s economic fundamentals are solid as shown by the strong GDP growth rate of 5.2% and stable inflation rate of 3.4% expected in 2018. He noted that the current account deficit of around 2.5% of GDP is manageable and that the government’s commitment to containing fiscal deficit at around 2% of GDP is noteworthy. Foreign exchange reserves have been kept at a sufficient level, and Indonesian sovereign bond was rated as investment grade during the current administration.
Mr. Nakao mentioned “the recent depreciation of the Indonesian rupiah may be overblown, driven by speculation, as Indonesia’s overall macroeconomic position today is strong.”
Regarding the emergency support, Mr. Nakao mentioned to President Widodo that in addition to an emergency budget support loan of up to $500 million, ADB stands ready to provide additional financing of about $500 million through project loans to support reconstruction of critical infrastructure, such as water supply and sanitation, schools, roads and bridges, and electricity networks among others. The $1 billion emergency assistance is on top of ADB’s regular sovereign lending program to Indonesia, which averages $2 billion annually.
ADB’s emergency assistance loans will be prepared in close coordination with the government, affected communities, and other stakeholders, and submitted to the ADB Board of Directors on a fast-track basis. These loans will have special terms, with grace period of 8 years and a repayment period of 32 years, longer than usual. ADB will also provide technical assistance to support government-led damage needs assessments as well as the recovery and reconstruction planning.
On 8 October, ADB approved a $3 million emergency grant, funded from ADB’s Asia Pacific Disaster Response Fund, to support immediate relief efforts in Central Sulawesi.
Original source: ADB
Published on 12 October 2018
