JAKARTA, May 18 (Reuters) - The Islamic Development Bank Group has agreed to loan Indonesia up to $5.2 billion for development programmes until 2020, according to a joint statement.

The statement referred to the agreement signed during the opening of the IDB's annual meeting in Jakarta late on Tuesday as a "tentative financing envelope".

Indonesia's Finance Minister Bambang Brodjonegoro said the funds would help finance several projects, including improvement of slum areas, electricity transmission and developing Islamic finance.

IDB said it will work with other donor institutions as well as multilateral lenders, including the World Bank, the Asian Development Bank and China-backed Asian Infrastructure Investment Bank "to mobilize additional resources for financing priority projects" in Indonesia.

It could also lend directly to Indonesia's state-owned enterprises with sovereign guarantees, the Saudi-based lender said.

Indonesia, together with the IDB and the government of Turkey will also set up an Islamic infrastructure bank, which could help finance projects in IDB member countries.

(Reporting by Gayatri Suroyo; Editing by Simon Cameron-Moore) ((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))

Keywords: INDONESIA LOANS