Indonesia last year sought $5.5 billion in standby loans from Australia, Japan, the World Bank and the Asian Development Bank to help meet budget shortfalls and stimulate a weakening economy.
Australia agreed to lend $1 billion, to be used only if Jakarta failed to raise enough bonds and other debt.
'We're not expecting at this stage that the Indonesian government would draw upon the loan,' Treasury official Kevin Playford told an Australian parliamentary hearing.
'The loan is a standby facility, only if they are unable to finance their budget deficit. At this stage they have already year-to-date fulfilled 15 percent of their borrowing requirements.'
'We would anticipate the Indonesian government would continue to be able to finance that activity.'
Treasury Secretary Ken Henry said the loans for Indonesia had helped restore market confidence in Indonesia.
'We were giving some confidence to global financial markets that Indonesia's fiscal financing task would be supported,' Henry said. 'That contributed to confidence globally that Indonesia would be able to finance its budget.'
Indonesian Finance Minister Sri Mulyani Indrawati has said the loans could be drawn down up until 2010 and were caused by liquidity shortages in the global financial market at the height of the financial crisis.
(Reporting by James Grubel; Editing by Mark Bendeich)
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