CGI pledges $5.2b in new aid to RI<\/p>\n
JAKARTA (JP): The World Bank-chaired Consultative Group for
\nIndonesia (CGI) yesterday committed US$5.20 billion in new loans
\nand grants to Indonesia for the 1994\/1995 fiscal year, 1.7
\npercent higher than last year.<\/p>\n
Gautam Kaji, World Bank Vice President for East Asia and the
\nPacific, told a news conference at the end of the CGI's two-day
\nmeeting in Paris yesterday that Japan has surpassed the World
\nBank with its pledge of $1.76 billion, up from last year's
\ncommitment of $1.44 billion. The World Bank promised $1.50
\nbillion against $1.60 billion last year, and the Asian
\nDevelopment Bank (ADB) $1.10 billion compared to $1.20 billion
\nlast year.<\/p>\n
Yesterday's joint briefing was also attended by Coordinating
\nMinister for Economy and Finance Saleh Afiff, State Minister of
\nNational Development Planning\/Chairman of the National
\nDevelopment Planning Board, Ginandjar Kartasasmita, and Governor
\nof Bank Indonesia J. Soedradjad Djiwandono.<\/p>\n
A Kompas correspondent reported from Paris yesterday that the
\nincrease in CGI's commitments was partly due to creditors'
\nanticipating the possible appreciation of the yen against the
\nU.S. dollar, a situation which causes increased debt repayments.<\/p>\n
Kaji, who earlier praised Indonesia's negotiating team for
\ntheir clear explanations on the country's concerted Sixth Five
\nYear Development Plan (Repelita VI), said that the central
\nmessages conveyed by CGI's creditors are the need for Indonesia
\nto maintain its poverty alleviation program, human resources and
\nbasic infrastructure development as well as continue its staunch
\nprotection of the environment.<\/p>\n
Donor countries which made commitments include Germany at
\n$157.41 million, France $140.57 million, Spain 24.51 million,
\nBritain $150.49 million and the United States $89.60 million<\/p>\n
Australia pledged $47.66 million, Canada $25.33 million,
\nSwitzerland $23.41 million, South Korea $9.56 million, New
\nZealand $3.03 million and Finland $0.99 million, in addition to
\nJapan's $1.76 billion.<\/p>\n
Multilateral and international organizations which have also
\nmade pledges include the Nordic Investment Bank $35 million, 10
\nUnited Nations agencies $50.50 million, the Islamic Development
\nBank $65 million, International Fund for Agricultural Development
\n(IFAD) $26.07 million, United Nations International Children's
\nFund (Unicef) $14 million, EIB $54.89 million, on top of the
\nWorld Bank's $1.50 billion and ADB's $1.10 billion.<\/p>\n
The fast-disbursement aid can be used for local financing,
\nmeanwhile declined to $200 million compared to $325 million last
\nyear.<\/p>\n
\"Japan is the single country among CGI's creditors which
\npledged $200 million for fast-disbursement aid,\" Kaji said.
\nJapan's loans under the CGI umbrella usually cover one-third of
\nthe total loans pledged by other CGI members. Last year the U.S.
\njoined Japan in pledging $25 million in fast-disbursement aid.<\/p>\n
Japan<\/p>\n
Deputy to Japan's ambassador to Indonesia, Minister Zenji
\nKaminaga, said here yesterday that Japan's loans for the sector
\nprogram this year will focus on preventing possible increases in
\nIndonesia's current account deficit as well as developing small-
\nscale projects, including education, health, social welfare,
\nhuman settlement, and water resources.<\/p>\n
Hiroshi Kirabayashi, heading the Japanese delegation, said
\nthat the CGI's forum should provide sound momentum for Indonesia
\nto promote cooperation with donor countries to maintain its
\nsustainable development in economic and social fields.<\/p>\n
\"Through such a forum, Indonesia can be a good model for other
\ncountries in tapping economic cooperation,\" he added.<\/p>\n
During the meeting, Japan proposed four key strategic policies
\nfor Indonesia to sustain its economy, he said.<\/p>\n
It suggested that Indonesia consistently stabilize its macro-
\neconomic policy under the prudent management of debts, create
\ngood governance and improve the regional infrastructures under
\nthe poverty reduction campaign.<\/p>\n
Afiff said that the delegations endorsed Indonesia's economic
\ndevelopment policy as prescribed in its continued five-year
\ndevelopment plans (Repelita), but urged the Indonesian government
\nto keep improving its prudent macro-economic management as well
\nas secure offshore loans to be used for development projects.<\/p>\n
He conceded that the World Bank earlier gave hints that
\nIndonesia's high incremental capital output ratio (ICOR) was
\nstill a key factor to the soft growth in Indonesia's economy. The
\nratio is a measure of the amount of investment required to
\nproduce one unit of value added (measured in currency).<\/p>\n
ICOR<\/p>\n
Responding to the World Bank's statement on ICOR, Afiff
\nearlier told Indonesian reporters that it was because Indonesia's
\nlong-term development programs emphasize infrastructure
\ndevelopment which does not show immediate profits.<\/p>\n
But Afiff acknowledged that the high level of ICOR is partly
\ndue to inefficiency and misallocation of public investments.<\/p>\n
Noted Indonesian economist Sumitro Djojohadikusumo warned
\nearlier this year that around 30 percent of the government's
\nspending was wasted through inefficiency or malfeasance.<\/p>\n
Sumitro estimated that the country's ICOR, which is far higher
\nthan those of other ASEAN countries, ranged between four to five
\npercent. ICOR of other ASEAN countries are between three and 3.5
\npercent.<\/p>\n
Afiff meanwhile assured the creditors that the Indonesian
\ngovernment is now in a strong position to cope with such
\ninefficiency.<\/p>\n
He said that private sectors have been also asked to help
\nimprove their aid management as part of their efforts to reduce
\nIndonesia's ICOR level.<\/p>\n
\"We therefore expect that private business sectors will be
\nable to promote growth-oriented centers while the government
\ndevelops areas which have less economic return,\" he added.<\/p>\n
According to the World Bank, Indonesia will be able to
\nincrease its economic growth to eight percent per year if it can
\nreduce its ICOR level to three percent.<\/p>\n
Afiff was optimistic that Indonesia's economic growth could
\neven reach nine percent, but that it should concentrate all its
\nresources on growth-oriented centers. However, he reminded that
\nit would offset the development of less-developed areas. (fhp)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cgi-pledges-52b-in-new-aid-to-ri-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}