Jakarta – The World Bank has decided to delay a planned one billion dollar loan to Indonesia until after elections in June of 1999, a report said Friday.

The Jakarta Post daily quoted the bank's country director for Indonesia, Dennis de Tray, as saying in an interview that the decision had been taken because the country's budget deficit in fiscal 1998-99 was narrowing faster than anticipated.

The budget deficit for the fiscal year ending March 1999 was expected to be around six percent of gross domestic product, instead of 8.3 percent as earlier forcast, he said.

The timing of the disbursement of the bank's two billion dollar component of the IMF package, of which 600 million dollars has already been disbursed, would depend on the Indonesian government's progress in implementing economic reforms, de Tray was quoted as saying.

Discussions with the Indonesian government on the release of 400 million dollars of the bank's commitment were still underway, he said, adding that a number of "uncomfortable issues" remained to be dealt with. The Post said de Tray also underlines in the interview that the government was barred from using the bailout funds for political purposes.