The Indonesian Ministry of Finance has permitted the Indonesian Ministry of Defense to seek foreign loans of up to $3.9 billion to maintain the combat capabilities of the Indonesian Air Force. This authorisation applies to three proposals presented by the Ministry of Defense. According to a report that Jane’s Information Group published on November 15, 2022, two of these plans include the purchase of the second batch of 12 multirole Dassault Rafale fighters from France as well as a batch of 12 to 18 multirole Dassault Mirage 2000-5 fighters from the Qatari Air Force.
The programme’s major objective is to increase the number of Rafale combat aircraft in its inventory. After reaching a consensus with the Ministry of National Development Planning in September 2022, the Indonesian Ministry of Finance authorised a fresh credit line with a foreign lender of $2.9 billion to purchase a second batch of 12-18 Rafales.
Recall that on February 10, 2022, the Indonesian Ministry of Defense signed a contract with the French company Dassault Aviation to purchase 42 Rafale jets. This contract was made with Dassault Aviation. It is anticipated that this agreement will result in a total cost of $7 billion for the supplies, excluding the cost of any weaponry. Due to Indonesia’s limited access to liquid funds, this Rafale purchase agreement was split into three parts. The first part of the agreement included the purchase of six aircraft (for which a formal contract was also signed in February), the second part included the purchase of 12-18 units, and the third part included the purchase of 18-24 units.
The formal acquisition of the first six Rafale aircraft was completed in 2021, costing a total of $1.1 billion. This money came from the budget of the Indonesian Ministry of Defense, as well as from international sources (probably French). The acceptance of this loan was also somewhat delayed. The contract for the first batch of six Rafale aircraft did not go into effect until September 9, 2022, after Indonesia had made advance payments using monies obtained from foreign lenders. Reports indicate that the first six Rafales will be delivered to the Indonesian Air Force 39 months after the deal is implemented by the end of 2025. If funding is maintained, the delivery of the remaining three Rafales will be finished by the end of 2026.
For the remaining portion of the Rafale acquisition programme to be financed, Indonesia needs foreign loans for $5.9 billion; however, the sources of financing still need to be identified. Furthermore, now that the Indonesian Ministry of Finance has given authorisation (and guarantees) for $2.9 billion, the Indonesian Ministry of Defense will be able to negotiate with foreign lenders to get finance for purchasing the second batch of Rafale aircraft.
There are reports that an additional $734.5 million of guarantees from the Indonesian Ministry of Finance will be used to seek loans to finance the purchase of 12 Mirage 2000-5 fighters (nine single-seat Mirage 2000-5EDA and three double-seat Mirage 2000-5DDA), which were removed from service with the Qatar Air Force in connection with their replacement with Rafale fighters purchased by Qatar. These Mirage 2000-5 fighters will be purchased by Indonesia.
The Qatari Mirage 2000-5 fighters saga
These Qatari Mirage 2000-5 fighters, manufactured between 1997 and 1998 and in good technical condition, drew the interest of a number of potential buyers, one of which was the Indian Air Force. The Indian Air Force attempted to negotiate the purchase of these fighters at one point but could not agree for reasons relating to both finances and intra-Indian bureaucracy. Although it was reported in November 2021 that an agreement had been reached on the acquisition of these aircraft by the French private company Ares, which intended to provide them on a contract basis to provide combat training services to customers (the company already had a contract with the French Navy), the agreement ultimately failed to materialise.
It was rumoured in August and September of 2022 that Bulgaria was interested in buying or leasing these aircraft as “temporary replacements.” Due to the restrictions imposed on Russia, the continued flight of the Bulgarian MiG-29 is in serious doubt. Since the delivery of the bought F-16s would be delayed, Bulgaria is exploring aircraft leasing options. In discussions with France and Sweden.
On September 21, Bulgarian Defense Minister Dimitar Stoyanov said, “On Friday, we had talks with the French side; they are ready to provide an offer for Mirage 2000-5 aircraft; our limitation is that we do not want to buy the aircraft, but to lease them. That is, provision of certain flight hours on lease.”