Indonesia would receive a loan of USD 300mn from the World Bank (WB) to reduce its widening budget deficit of 2004. Director General of Treasury at the Finance Ministry, Mulia Nasution said that the loan agreement would be signed on Dec 22, 2004.
Earlier in Dec 2003, WB had assured to lend USD 825mn to Indonesia for this year. Nasution said that the government aims to increase revenue from taxes and reduce spending in order to control deficit.
Indonesia's 2004 deficit might increase further IDR 11.8tn from an expected IDR 26.3tn mainly because of increase in crude oil prices causing higher amount of fuel subsidy. The government expects the deficit to reach to the extent of 1.5% of GDP for 2004 and 0.8% in 2005.
The World Bank's loans to Indonesia have averaged USD 450mn in each of the past three years.