Indonesia is expected to conclude negotiations with China on an additional $560 million loan for a high-speed rail project.
The cost of the line linking Jakarta with the textile hub of Bandung has exceeded the budget. This is pushing Indonesia to seek a new loan from China Development Bank to help cover the $1.2 billion cost overrun.
The total cost of the high-profile Belt and Road Initiative (BRI) in Indonesia, has risen to more than $7 billion.
Luhut Pandjaitan, Senior Indonesian minister, said during a trip to Beijing last week, that China has cut the interest rate on a proposed additional loan to 3.4% from previously 4%.
“We are finalizing the interest rate. They’ve agreed below 4%, but we want lower,” Luhut said.
Jakarta has insisted that Chinese finances for the project to be delivered on a business-to-business basis. This is due to accusations that some other countries hosting BRI projects have fallen into a debt trap.
China Development Bank could not immediately be reached for comment.
Source: marketscreener.com
