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News Updates 17 February 2022
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ADB Provides IDR 2.1 T Loan to RI to Support Green Infrastructure and SDG's

The Asian Development Bank (ADB) has approved the disbursement of loans worth US$ 150 million or Rp. 2.14 trillion (exchange rate of Rp. 14,300/US$) to the Indonesian government. This loan will be used to finance green infrastructure projects and support the targets of the Sustainable Development Goals (SDGs).

"This facility will enhance sustainable infrastructure development and accelerate Indonesia's recovery from the COVID-19 pandemic by raising capital and creating jobs," said Head of ADB's Green and Innovative Financing Unit for Southeast Asia Anouj Mehta in an official statement, Wednesday (16/2).

This loan is provided through The Sustainable Development Goals Indonesia One-Green Finance Facility (SIO-GFF). Through this facility, loans provided by ADB will be used to finance at least 10 projects, with a minimum of 70% of the financing supporting green infrastructure and the remainder supporting the Sustainable Development Goals (SDGs) targets.

Mehta said the facility would also design viable projects to attract funding to complement government spending, including from private, institutional and commercial sources.

"SIO-GFF is intended to be a catalyst for up to eight times of the funds we invest to support climate-friendly infrastructure and help Indonesia's progress towards the SDGs," he said.

This loan to the Indonesian government will then be forwarded to PT Sarana Multi Infrastruktur (Persero) or PT SMI. In addition to these loans, ADB has approved technical assistance to help strengthen SMI's ability to operate the SIO-GFF facility, and expand SMI's services to support other borrowers and catalyze private funding.

The technical assistance was funded in the amount of US$ 1.2 million or Rp 17.2 billion from the Australian Department of Foreign Affairs and Trade and US$ 375,000 or Rp 5.3 billion from the Luxembourg Financial Sector Development Partnership Special Fund.

ADB's Senior Financial Sector Specialist Benita Ainabe said this support to Indonesia would support efforts to reduce greenhouse gases. This is important considering that Indonesia contributes the fifth largest greenhouse gas emissions in the world and contributes more than half of the greenhouse gases in Southeast Asia.

"Learning from our experience in Indonesia, we hope to expand this approach to other countries in the region," said Ainabe.

This SIO-GFF facility seeks to help manage credit risk throughout the project life cycle, especially during the construction phase and the early years of commercial operations when cash flows are still negative. The facility will primarily offer loans, but may also provide equity, convertible debt, and collateral, to reduce project credit risk and attract commercial lenders.

In a previous ADB report, Indonesia's annual infrastructure financing needs from 2016 to 2020 were estimated at an average of US$ 74 billion. This value includes the climate change component. Meanwhile, Indonesia's infrastructure financing gap annually reaches US$ 51 billion.

 

Source: katadata.co.id

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