Japan has agreed in principle to reschedule $2.5 billion (312.5 billion yen) in credit to Indonesia on the eve of this week's annual meeting of the Paris Club of major creditor nations, international financial sources said over the weekend.
"For the first time in 30 years, Japan, the biggest donor to Indonesia, accepted Jakarta's request for debt rescheduling," a source close to the negotiations told Kyodo News. "That is a significant step to lessen the repayment burden of Indonesia."
According to official statistics, Indonesia's external debts stood at more than $130 billion as of the end of last year, with a debt ratio of over 100 percent to gross domestic product. The government owes approximately $70 billion, and the rest is owed by the private sector.
Last April, the Paris Club agreed to reschedule $5.8 billion of Indonesian debts due in 2000 and 2001. Since then, Tokyo and Jakarta have been negotiating a bilateral rescheduling scheme, and a final agreement was reached March 23, the source said.