JAKARTA/CANBERRA - Indonesia has approached Australia, Japan, the World Bank and other official creditors to line up credit to help cover a projected US$4.4 billion budget deficit next year, a finance ministry official
said on Wednesday.

Indonesian policy makers are worried they may face problems raising funds amid market turmoil sparked by fears it could become the next casualty of a worldwide flight from risky assets.

The rupiah currency has fallen almost 25 percent this year.

"This is actually a precautionary measure in case there is trouble in the financial markets which disturbs our bond
issues," he told Reuters by telephone, adding that loans would be agreed on a basis whereby they would only be released if there was a trigger.

"Basically they all support us, but as for the numbers, how much they will be, what the terms and conditions are, we have not agreed on those yet," he added.

Australian Treasurer Wayne Swan confirmed Indonesia had approached Australia for a loan, which newspapers reported amounted to about US$2 billion.

Indonesia previously sought help from Australia during the 1997/1998 Asian financial crisis, with Canberra lending US$1 billion for structural reform in a government-to-government arrangement.

Testing time

"It is the case that the Indonesians have approached a number of international organisations, including the World
Bank, and also have approached the Australian government for some assistance at a time which is very testing," Swan told Parliament in Canberra.

An Indonesian team, including a senior adviser to Finance Minister Sri Mulyani Indrawati, met Australian Treasury
officials on Monday to discuss the terms of a loan, an Indonesian source told Reuters earlier.

Indonesia has forecast its budget deficit will be around 52.7 trillion rupiah (US$4.37 billion) next year.

But financial turmoil is making it hard for emerging economies to secure loans or sell bonds as international
investors shy away from markets perceived as high risk.

There has been market talk that Indonesia was considering assessing the IMF's special Short-term Lending Facility, to boost its foreign exchange reserves.

But President Susilo Bambang Yudhoyono was reported as saying during a recent overseas trip that the government would not seek such loans, saying authorities would prefer to seek funds from other sources.

The facility, which is unlike a rescue package and is unconditional, once approved allows the recipient country to
get up to five times its drawing rights, which should add up to more than US$15 billion for Indonesia, analysts said.

Indonesia, Southeast Asia's largest economy, has slashed its 2009 growth forecast from 6.3 percent to 4.5-5 percent next year, as global economic conditions deteriorate.

Yudhoyono pressed Australian Prime Minister Kevin Rudd on the loan issue at a weekend meeting of Asia-Pacific leaders in Peru, Australia's Courier-Mail newspaper said on Wednesday.

Rudd and Yudhoyono will likely discuss the issue again at a meeting of regional leaders on democracy issues in Bali on Dec 10, with any loan likely to be part of an international package overseen by the World Bank, newspapers said.