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Indonesia's Bank Lending to Slow, Bad Loans to Show in 2009

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Bank lending in Indonesia would slow next year and the non performing loans may rise, as the fallout of the global financial routs bite on real sector, reducing business expansion and debt repayment capacity, a paper said on Friday.

Chief economist at the Indonesian largest state-owned Bank Mandiri Mirza Adityaswara quoted by the Jakarta Post as saying that national bank loans would grow by an estimated 15 percent in 2009, below the 22 percent growth forecast by the central bank.

"Banks will be more careful in channeling loans by tightening loan requirements. A 22 percent growth rate is too optimistic," Mirza told a press conference.

According to the central bank, lending grew by 30 percent as of November this year from a year earlier.

Bank Mandiri said that this year the lending was expected to grow 18 percent.

The World Bank predicted Indonesia's economy may grow by 4.4 percent in 2009, while Finance Minister Sri Mulyani Indrawati agreed that economic growth might fall as low as 4.5 percent. However the 2009 state budget still assumes growth at 6 percent.

(Xinhua News Agency December 12, 2008)