TSAMTO, August 10. The Ministry of Finance of Indonesia has given permission to the command of the country's Armed Forces and the Ministry of Defense to receive external loans in the amount of up to $ 5.8 billion in 2021.
According to Janes, according to documents provided to the publication by a source in the Indonesian government, permits for obtaining foreign loans were approved for a total of 31 procurement, modernization and maintenance programs for all three types of the country's armed forces.
The permits were granted after consultation with the Ministry of Defense and the Ministry of National Development Planning (BAPPENAS).
The amount approved for FY 2021 represents an increase of almost 550% compared to $ 894 million. in the form of external defense loans approved for six programs in 2019. For comparison: the Ministry of Finance of Indonesia approved an external loan in the amount of 2.4 and 4.4 billion dollars for 2016 and 2017, respectively. In 2018 and 2020, there were no approved external loans for defense.
Among the programs that can now be financed from proceeds from external loans, we can note the purchase of R-73 air-to-air missiles for a total of $ 15.7 million and R-27 for up to $ 36 million.
In addition, the Ministry of Defense also received permission for external loans in the amount of up to $ 750 million for the purchase of radar systems for air defense and up to $ 540 million for medium-range missile systems, launchers and related elements.
These programs complement those reported by Janes earlier this year, such as a $ 700 million program for the purchase of two tanker aircraft and a $ 600 million project for the purchase of one used submarine.
Despite the fact that 31 programs were approved for foreign credit financing in 2021, only one of them has currently materialized into a contract-a deal for six T-50i Golden Eagle training aircraft of Korea Aerospace Industries (KAI). However, the contract will enter into force only after the initial payment, so now Indonesia is attracting a foreign lender to finance the purchase in the amount of $ 240 million.
Indonesia's growing dependence on external financing for the purchase of new and modernization of existing VIVT is explained by the relatively limited state funding allocated for such programs.
In particular, from the defense budget for 2021 in the amount of $ 9.7 billion, only 8.6%, or slightly less than $ 830 million, was allocated for the procurement programs of VIVT. At the same time, about $ 50 million is allocated for research and development. If the Indonesian Defense Ministry agrees to borrow the entire approved amount of $ 5.8 billion in 2021, it will theoretically take more than six years to recoup current purchases from the defense budget.
