Indonesia, U.S. in debt payment deal on forests

Tue Jun 30, 2009 7:25am EDT

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JAKARTA, June 30 (Reuters) - The United States and Indonesia have signed an agreement to cut Indonesia's debt payments by around $30 million in exchange for saving forests on Sumatra island, the U.S. embassy in Jakarta said on Tuesday.

Indonesia has rich bio-diversity and is home to endangered species such as orangutans and Sumatran tigers, but it also has one of the highest deforestation rates in the world, mainly due to land clearance for farming and plantations.

The rapid rate of deforestation has also helped make Indonesia one of world's top emitters of greenhouse gases.

Under the scheme, Indonesia will place debt repayments into a trust over eight years instead of repaying the U.S. government, the U.S. embassy said in a statement.

The trust will then issue grants for restoration and protection efforts covering about 7.4 million hectares (18.29 million acres) of forest in Sumatra, including the Way Kambas National Park which is known for its elephants' sanctuary.

The U.S.-based Conservation International and the Indonesian Biodiversity Foundation (KEHATI) are also involved in the project and will donate $2 million, the embassy said.

The Indonesian scheme is the largest of its kind under the U.S. Tropical Forest Conservation Act.

Washington has struck similar deals with countries such as Bangladesh, Colombia, Panama and the Philippines. (Reporting by Andreas Ismar; Editing by Ed Davies)





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