"We are processing it [the loan] to help maintain the world`s economy, so that it does not become worse," Indonesian finance minister Agus Martowardojo said at the parliament building here on Thursday.

He added that the loan would be up to a maximum of US$1 billion, which was still being processed for approval.

Agus said IMF needed extra capital, adding that the government`s decision to provide the financial aid highlighted Indonesia`s good economic condition and its commitment to safeguarding the global economy from the current European crisis.

"Now we can give a loan to IMF, showing that our economic condition is good. We must also show our concern for the world`s economic condition which needs to be improved," he explained.

The minister said the loan would not be sourced from the national budget, but from the country`s foreign exchange reserves.

"The aid to IMF will remain in the Indonesian balance sheet as foreign exchange reserve but will be recorded at the IMF as a loan," he added.

At the recent G-20 Summit in Los Cabos, Mexico, participant countries had made a commitment to support IMF financially so it could carry out its surveillance function.

The G-20 leaders fully supported the agreement made by finance ministers and central bank governors to provide IMF with US$430 billion "which would be collected through bilateral arrangements between donor countries and the IMF" to carry out its operations.