Indonesia govt commits to cooperative loan repayments

JAKARTA: Indonesia’s government will make repayments of bank loans that are funding a national village cooperative programme, the finance minister said, as the first instalment falls due on Friday. Suahasil Nazara, who was appointed as finance minister last week, said late on Thursday that the repayments will be made once the government verifies the funds were used as intended, including for the construction of cooperative stores in thousands of villages. “This has been budgeted, the fund is ready, we will definitely pay,” Suahasil said, noting 37 trillion rupiah (USD2.1 billion) had been allocated in the 2026 budget.

“There must be verification for what have been built and how many,” he said. “There’s a validation process.” The bank loans are part of a complicated financing scheme for the “Red and White” village cooperative programme, an initiative of President Prabowo Subianto to stimulate rural economies as part of his drive to lift national growth to 8percent.

Prabowo has said he wants the cooperatives to sell government-subsidised products, such as fertilisers and cooking gas, buy local produce, and offer cheap loans to villagers.

FOUR STATE BANKS LEND USD13.6 BILLION

Under the scheme, state company PT Agrinas Pangan Nusantara is building 80,000 stores in villages across the vast archipelago, funded by 240 trillion rupiah of low-interest loanswith 6-year tenures from four state banks. Bank Rakyat Indonesia, Bank Negara Indonesia , Bank Mandiri and Bank Syariah Indonesia are the lenders. When construction is completed, the loans will then be repaid by the government, rather than Agrinas Pangan, and eventually ownership of the cooperatives will be transferred to local communities. The Cooperative Ministry and state auditors are in charge of the verification process.