Government says unused aid hard to shift<\/p>\n
JAKARTA (JP): A government plan to seek donors' approval to
\nspeed up the disbursement of some US$17 billion in unused foreign
\naid pledged several years ago may be difficult to realize,
\naccording to a senior government official who participated in
\nnegotiations for the assistance.<\/p>\n
The official said that requirements attached to the loans,
\nwhich are mainly intended for infrastructure and project
\ndevelopment, may be difficult to satisfy, particularly amid the
\ncurrent economic woes, coupled with ongoing social and political
\ninstability.<\/p>\n
\"According to a study, the actual disbursement could take up
\nto two years,\" the official said.<\/p>\n
Coordinating Minister for the Economy Rizal Ramli said on
\nThursday that the government would attempt to accelerate
\ndisbursement of the unused foreign aid, which would provide much
\nneeded fiscal stimulus to the economy this year.<\/p>\n
Rizal said that the country had been paying commitment fees of
\nbetween 0.7 percent and 1 percent for the pledged loans.<\/p>\n
Indonesia's foreign aid has primarily come from donor
\ncountries and institutions grouped in the so-called Consultative
\nGroup on Indonesia (CGI), which is coordinated by the World Bank.<\/p>\n
The senior government official said, however, that Indonesia
\nmust provide a corresponding rupiah contribution in any project
\nfinanced by the foreign loans.<\/p>\n
The official said that prior to the economic crisis, which hit
\nthe country in the middle of 1997, the rupiah portion could reach
\n40 percent, although several donors, including the World Bank,
\nhad now agreed to lower the ratio to around 20 percent.<\/p>\n
The official said that, because of the high local funding
\ncomponent required, the government had not utilized all of the
\nloans pledged in the past.<\/p>\n
\"It is still a question mark as to whether Rizal can come up
\nwith the local funding component,\" the official said.<\/p>\n
The official said that another tough requirement was the
\nprocurement conditions, including the selection process for
\nconsulting services, which could take \"a very long time\".<\/p>\n
\"But technically this can be accelerated,\" the official said.<\/p>\n
He explained that the most difficult task was providing land
\nfor project development. \"I think this will be the most crucial
\nand difficult task,\" adding that, unlike in the past, the World
\nBank now insisted that the government first provide land before a
\nloan could be disbursed.<\/p>\n
Amid the current political and social problems gripping the
\ncountry it will prove difficult convincing international donors
\nthat land has been secured for a particular project. Confidence
\nin the acquisition of land has been undermined following several
\nland ownership disputes recently, some involving projects
\nundertaken by foreign investors.<\/p>\n
Another problem will arise from the new fiscal
\ndecentralization policy, creating a question mark over
\nresponsibility for repayment of the foreign loans: the central
\ngovernment or regional government.<\/p>\n
But Rizal said that the government would examine different
\napproaches in order to meet the requirements, as well as
\nnegotiating less demanding requirements with donors.<\/p>\n
\"We'll ask that the local funding requirement be lowered to
\nbelow 20 percent,\" he said.<\/p>\n
He added that the government would also request the House of
\nRepresentatives' approval to use surplus funds from the previous
\nstate budget, amounting to Rp 3 trillion, as the government's
\ncontribution to funded projects.<\/p>\n
Rizal dismissed suggestions that plans to speed up the aid
\ndisbursement was a sign that the 2001 state budget was in deep
\ntrouble amid the current weakening of the rupiah and rising
\ndomestic interest rates.<\/p>\n
The rupiah dropped to a 30-month low of around Rp 11,500 per
\nU.S. dollar recently, in response to worsening relations with the
\nInternational Monetary Fund (IMF) and continuing political
\ninstability.<\/p>\n
The rupiah is currently hovering at around Rp 10,400 per
\ndollar, compared to the state budget assumption of Rp 7,800 per
\ndollar for the 2001 fiscal year.<\/p>\n
The weakening rupiah has forced the central bank to push the
\ninterest rate of one-month Bank Indonesia SBI promissory notes to
\n15.58 percent this week, compared to 11 percent projected in the
\nstate budget.<\/p>\n
The IMF has already warned of the serious impact that the
\nrupiah's fall combined with rising interest rates will have on
\nthe state budget. Despite past tension, however, there have been
\nrecent indications that relations between the government and the
\nIMF are improving. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-says-unused-aid-hard-to-shift-1447893297",
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