Japan is prepared to offer bilateral financial support to help stabilize the weakening Indonesian rupiah, Prime Minister Ryutaro Hashimoto told Indonesian President Suharto during a telephone conversation Wednesday.

A senior Finance Ministry official said Hashimoto promised that Japan would offer loans to the Southeast Asian nation to help buoy market confidence in the currency, which has been falling against the dollar since early July. The two governments will soon begin bilateral talks on the loans, but "Japan's assistance would be given on the precondition that Indonesia and the International Monetary Fund agree to an economic adjustment program," a precursor to receiving financial aid from the IMF, the official said.

The official declined to comment on the potential amount of Japan's aid, but stressed that Tokyo's loans would serve as backup funds in the event that IMF payments were insufficient to support Indonesia's needs. Singapore has indicated its willingness to provide $10 billion in loans to Indonesia, while Australia has also expressed readiness to extend aid once IMF conditions are agreed to.