According to French media, on June 7, 2021, during the visit of the Minister of the Armed Forces of France Florence Parly to Indonesia, the military departments of the two countries signed an agreement of intent (Letter of Intent - LoI) regarding the purchase by Indonesia of 36 French Dassault Rafale fighters of new construction. At the same time, this agreement is not a firm contract, the conclusion of which is expected only by the end of 2022.
Carrier-based fighter Dassault Rafale M (tail number "45") of the French Navy at the Indonesian air base Sultan Iskandar Muda (Banda Aceh) on the island of Sumatra, 19.05.2019 (c) Khalis Surry / AP
Negotiations on the possibility of purchasing Rafale fighter jets by Indonesia have been underway for about two years, with the Indonesian side initially requesting the purchase of 48 aircraft. The main problem in the way of the transaction remains the lack of financial resources from the Indonesian side, which is why Indonesia is seeking broad offset counter-obligations from France, as well as the provision of preferential terms and loans under state guarantees.
It is reported that the French side is ready to finance the supply of Rafale to Indonesia on terms similar to the financing of the recent second contract for the supply of 30 Rafale to Egypt-at the expense of loans allocated by a consortium of French banks under state guarantees allocated by the French Treasury and covering 80% of the transaction value.
However, such a large loan is causing concern to financial authorities in Indonesia itself, and earlier in June, an application for the purchase of 36 Rafale fighter jets from France for the Indonesian Air Force was not formally published by the Indonesian Ministry of Finance as a defense procurement program for the 2021 fiscal year. Thus, the conclusion of the contract for the purchase of Iidonesia Rafale was postponed to the next fiscal year. This was due to the fact that earlier the Ministry of National Development Planning of Indonesia set a limited limit (about $ 1.1 billion) for obtaining foreign (i.e. French) credit financing to ensure the purchase of Rafale fighter jets. Now the Indonesian Ministry of Defense needs to get approval of a large French loan for this deal from the Indonesian financial and economic departments.
