Paris – The Club of Paris, a group of leading creditor nations, agreed Thursday to reschedule 5.8 billion dollars of Indonesia's public debt. The sum – a far bigger slice than Indonesia had hoped for – will be repaid on a medium- and long-term basis between now and the end of March 2002.

"For us, this memorandum of understanding is a clear signal of the confidence we have in the recovery of the Indonesian economy," Philippe de Fontaine Vive, vice-president of the Club of Paris, told reporters.

Before Indonesian finance ministers began the two-day meeting with the Club of Paris on Wednesday, Bank Indonesia had said it hoped the deal would cover at least 2.1 billion dollars.

That is the amount of interest Indonesia owes on offshore debts this year. "We trust that in the medium term, Indonesian recovery is happening and so the international community wants to be a part of it through the public creditors," the Club vice-president said.

The Club signed an memorandum of understanding with Indonesia. Technical details of the rescheduling will be negotiated bilaterally in the coming months.

Indonesia's largest creditor, Club-member Japan, has already agreed to reschedule debt repayments totalling 1.6 million dollars this year. "In these circumstances, we are sure that this new memorandum of understanding should contribute to better capital in-flows, particularly private capital flows into Indonesia which has been part of the successful revival of the Indonesian economy."