JAKARTA (Bloomberg): Indonesia said it will receive a loan of $300 million from the World Bank in the next two weeks to curb this year's widening budget deficit.

The loan agreement will be signed on Dec. 22, Mulia Nasution, director general of treasury at the finance ministry, said. The World Bank pledged in December 2003 to lend Indonesia $825 million for this year.

"The deficit will remain under control," Nasution told reporters at the ministry office in Jakarta. "We are aiming to boost revenue from taxes and spending will be restricted."

Southeast Asia's biggest economy, struggling to attract overseas investment, is counting on consumer spending and loans to spur growth to 4.8 percent this year and as much as 5.5 percent next year. Indonesia's 2004 deficit may widen a further Rp11.8 trillion ($1.28 billion) from an estimated Rp26.3 trillion because an increase in crude-oil prices raised the cost of fuel subsidies.

The 30-member Consultative Group on Indonesia pledged in December last year $2.8 billion in new loans after the nation exited a $5.5 billion International Monetary Fund loan program. Most of the funds are slated to narrow the budget deficit and fund roads, hospitals and power plants. Overseas lenders include the World Bank, the Asian Development Bank and Japan.

Indonesia may have to borrow more as the 36 percent surge in oil prices this year threatens to inflate fuel subsidies. The government expects the deficit to reach as much as 1.5 percent of gross domestic product this year and 0.8 percent in 2005.

The World Bank will lend Indonesia between $450 million and $850 million a year to fund health programs and projects to alleviate poverty, and to build power plants and other infrastructure, it said in its country assistance report for July 2003 through June 2007. The bank's loans to Indonesia averaged $450 million in each of the past three years. (*)