Prime Minister Junichiro Koizumi is set to announce today at an emergency summit meeting on tsunami relief in Jakarta that Tokyo will offer a moratorium on the repayment of loans to Indonesia, official sources said Wednesday.

Japan is Indonesia's largest creditor.

The Southeast Asian nation suffered unprecedented devastation from last week's earthquake off the coast of Sumatra and the ensuing tsunami.

As of March 2004, Indonesia owed Japan 2.26 trillion yen, as much as 20 percent of all of Tokyo's overseas yen loans.

The period of debt suspension and other details will be worked out in talks with Indonesia, officials said.

Speaking to reporters Wednesday, Finance Minister Sadakazu Tanigaki acknowledged that debt relief was on the cards for Indonesia, the country hit hardest by the disaster.

``There'll be discussions (of debt relief measures) at next week's Paris Club (of creditor nations) meeting,'' Tanigaki said. ``And we, too, are discussing moratoriums.''

Asked whether Japan should go a step further and pardon some of the loans, Tanigaki said: ``No country has made such a request to us, and so I would say it may not be appropriate.''

Tokyo's debt relief for Indonesia follows announcements by Germany, France and Canada to extend moratoriums on their loans to the disaster-stricken nation, Sri Lanka and other affected countries.

The Paris Club will decide on debt rescheduling at a meeting Wednesday.

Japan is making its presence felt in the region amid an outpouring of international aid.

At Thursday's summit meeting, Koizumi will promise emergency financial aid worth about $500 million (52.2 billion yen) for disaster relief, a record sum for Japan.

It marks the highest share of the combined $2 billion pledged by about 40 countries.

In another relief measure, the prime minister will inform the summit that Self-Defense Forces personnel will be sent to provide medical and transport services.

On Dec. 28, Japan initially announced financial aid of $30 million for disaster relief, but boosted the amount after the United States on Friday upped its aid to $350 million and China pledged $60 million.(IHT/Asahi: January 6,2005)