Indonesia govt commits to cooperative loan repayments

Jakarta: Indonesia's government has pledged to make repayments on bank loans that are financing a nationwide village cooperative programme, according to Finance Minister Suahasil Nazara. The first installment is due on Friday. The repayment will occur once the government confirms the funds were utilized as intended, including the construction of cooperative stores in numerous villages.

Nazara revealed this late on Thursday, stating that the budget allocates 37 trillion rupiah (USD2.1 billion) for this purpose. He emphasized that the verification process will take place to ascertain the construction completed and the number of cooperatives established. "There must be validation for what has been built and how many," he noted, adding that there is a validation process in place.

These loans are part of the "Red and White" village cooperative program, initiated by President Prabowo Subianto to boost rural economies as part of his ambition to elevate national growth to 8%. Prabowo envisions cooperatives selling subsidized government products, procuring local produce, and offering affordable loans to villagers.

Four state banks – Bank Rakyat Indonesia, Bank Negara Indonesia, Bank Mandiri, and Bank Syariah Indonesia – have contributed a total of USD13.6 billion in low-interest, six-year loans for this initiative.

Under the scheme, state-run PT Agrinas Pangan Nusantara is constructing 80,000 stores in villages nationwide. The loans, amounting to 240 trillion rupiah, are provided by the four state banks. Upon completion of construction, the loans will be repaid by the government instead of Agrinas Pangan. Eventually, ownership of the cooperatives will be transferred to local communities. The Cooperative Ministry and state auditors oversee the verification process.