Canberra, Australia – Australia will provide financial support for upgrading up to 1000 kilometres of roads in Indonesia, as part of the ongoing response to the 2004 Indian Ocean Tsunami.

Australia and Indonesia have signed an agreement for a $300 million interest-free loan, under the $1 billion Australia-Indonesia Partnership for Reconstruction and Development.

The loan will help Indonesia improve the quality of its national road network and about 4.5 kilometres of bridges, mainly in eastern Indonesia.

These improvements to Indonesia’s key economic infrastructure will significantly reduce travel times and costs, and improve market access by better linking producers to markets.

Better roads will improve access to jobs, health services and essential social and educational facilities in rural and regional areas.

The signing of this loan agreement is another example of the strong bilateral relationship between the Governments of Australia and Indonesia. Australia is working closely with the Government of Indonesia to identify where road upgrades are most needed.

Indonesia will be able to repay the zero interest loan, with no associated fees or charges, over 40 years.

Australia is also supporting the Indonesian Government to improve its capacity to manage its vast national road network.

The loan is supported by a $28 million grant for planning and design to support the delivery of high quality construction.

Major road works are expected to commence in South Sulawesi and South Kalimantan in the first half of 2008, with other provinces of eastern Indonesia to follow.