REPUBLIKA.CO.ID, JAKARTA - The Indonesian government plans to offer up to US$1 billion in loans to help the International Monetary Fund strengthen its capital. "We are processing it (the loan -Ed) to help maintain the world`s economy and avoid it to worsen," Indonesian finance minister Agus Martowardojo said at the parliament building on Thursday.

He added that the loan would be up to a maximum of 1 billion USD, which was still in waiting for approval.

Agus said IMF needed extra capital, adding that the government`s decision to provide the financial aid highlighted Indonesia`s good economic condition and its commitment to safeguarding the global economy from the current European crisis.

"Now we can provide a loan to IMF, showing that our economic condition is good. We must also show our concern for the world`s economic condition which needs to be improved," he explained.

The minister said the loan would not be sourced from the national budget, but from the country`s foreign exchange reserves. "The aid to IMF will remain in the Indonesian balance sheet as foreign exchange reserve but will be recorded at the IMF as a loan," he added.

At the recent G-20 Summit in Los Cabos, Mexico, participant countries had made a commitment to support IMF financially so it could carry out its surveillance function. The G-20 leaders fully supported the agreement made by finance ministers and central bank governors to provide IMF with 430 billion USD "which would be collected through bilateral arrangements between donor countries and the IMF" to carry out its operations.

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