The Australian Government will join the World Bank's Program for Economic Resilience, Investment and Social Assistance in Indonesia (PERISAI) by providing a contingent loan along with the Asian Development Bank and the World Bank.
This stand-by loan facility is designed to be a financing option of last resort, and can only be accessed if Indonesia's circumstances deteriorate markedly.
The loan is similar to the loan facilities made available during the Asian financial crisis in 1997-1998, and during the global financial crisis, neither of which were drawn upon.
Australia's contribution of a $1 billion standby loan facility forms part of a package of international contingent loans to Indonesia of up to US$5.5 billion.
In the unlikely event that the facility is drawn upon, it would be repaid with interest and would not impact on the Commonwealth's budget bottom line.
Continued global uncertainty means that even countries with responsible macroeconomic and banking policies such as Indonesia are being impacted.
In light of this, we welcome Indonesia's proactive steps to safeguard their economic stability and their adoption of sound economic policies.
Australia is a close friend and neighbour of Indonesia. In this Asian century, we have a clear interest in ensuring growing economies in our region remain strong.
The Government will continue to support Indonesia to secure the country's continued economic prospects and ensure a stable and prosperous region more broadly.