Indonesia increases amount of foreign defence loans approved for 2021

The Indonesian Ministry of Finance (MoF) has granted approval for the country's armed forces (Tentara Nasional Indonesia: TNI) and defence ministry to obtain up to USD5.8 billion in foreign loans for the 2021 financial year.

Permissions to source for foreign loans have been approved for a total of 31 procurement, upgrades, and maintenance programmes across all three services of the TNI, according to documents and circulars that have been provided to Janes by Indonesian government sources.

The approvals have been granted after consultations with the Ministry of Defence (MoD) and the Ministry of National Development Planning (Kementerian Perencanaan Pembangunan Nasional: BAPPENAS).

The amount approved for 2021 represents an increase of almost 550% when compared to the USD894 million in foreign defence loans approved for the six programmes 2019. In further comparison, the Indonesian MoF approved USD2.4 billion and USD4.4 billion in foreign credit for 2016 and 2017 respectively. There were no foreign defence loans approved in 2018 and 2020.

Among programmes that can now be funded with proceeds from foreign loans include the R-73 (AA-11 ‘Archer') infrared homing dogfight missile, for which a total of USD15.7 million has been approved, and the Vympel R-27 (AA-10 ‘Alamo') air-to-air missile, which can be funded for up to USD36 million in foreign defence credits.

In addition, the MoD has also obtained approval to source up to USD750 million in loans for ground-controlled interception radar systems and up to USD540 million for medium-range missiles, launchers, and its associated systems.

These programmes are in addition to those reported by Janes