Indonesia gets $5.36b in new aid<\/p>\n
PARIS (Reuter): Indonesia won US$5.36 billion in aid for the
\nnext year from donor countries and development agencies
\nyesterday, the World Bank said following a two-day meeting at its
\nParis office.<\/p>\n
The sum is an increase from the $5.2 billion pledged in 1994.<\/p>\n
The World Bank congratulated Indonesia, one of the world's
\nfastest-growing economies, on its economic performance and sound
\nfinancial management.<\/p>\n
Indonesia's controversial human rights record in East Timor
\nwas not discussed, World Bank Vice President for East Asia and
\nthe Pacific Russell Cheetham said.<\/p>\n
"Specific human rights were not put on the agenda here," he
\ntold journalists after the close of the two-day annual meeting of
\nIndonesia's creditor consortium, the World Bank-chaired
\nConsultative Group on Indonesia.<\/p>\n
Cheetham said about 50 percent of the pledges were made by
\nagencies and the rest was from donor countries. He said it was
\ntoo early to give any further breakdown of the assistance.<\/p>\n
In Jakarta, a Japanese official said yesterday his government
\nhad raised its aid commitment to Indonesia for the fiscal year
\n1995-1996 by 6.3 percent to 187.6 billion yen from 176.5 billion
\nyen in the previous year.<\/p>\n
Fast-disbursing<\/p>\n
Zenji Kaminaga, the deputy to the Japanese ambassador said the
\naid commitment had risen by about 26 percent in terms of the U.S.
\ndollar from $1.67 billion last year to $2.16 billion.<\/p>\n
However, Japanese fast-disbursing assistance in the form of
\nSector Program Loan (SPL), the loan facility which could be used
\nto strengthen Indonesia's balance of payments, remained at the
\nprevious year's level of the equivalent of $200 million.<\/p>\n
"The larger commitment was made in response to the Indonesian
\ngovernment's request. Almost all of the requests were fulfilled,"
\nhe told a press briefing in Jakarta.<\/p>\n
The aid package includes 170.1 billion yen in the form of
\nOverseas Development Assistance (ODA), of which 152.8 billion yen
\nis in project aid, 17.3 billion yen ($200 million) in fast-
\ndisbursing aid and the remaining 17.5 billion yen in grant and
\ntechnical assistance.<\/p>\n
Kaminaga said that the 152.8 billion yen project aid also
\nincluded 37.2 billion yen in fast-disbursing project loans.<\/p>\n
He said that the interest rate on the soft loans would be
\nreduced to 2.5 percent from 2.6 percent in the previous year.<\/p>\n
Coordinating Minister for Economy and Development Supervision
\nSaleh Afiff, who led the Indonesian delegation at the meeting,
\nsaid that the steep surge in the yen's value against the dollar
\nhad significantly increased the amount of the Indonesian
\ngovernment's outstanding debts, which in April reached a total of
\naround $64 billion. About 40 percent of the total is denominated
\nin yen.<\/p>\n
"Every one percent increase in the yen rate increases the
\nstock of our foreign debts by around $350 million and every five
\npercent rise in the yen rate raises our debt service burden by
\naround $200 million a year," he was quoted by the Kompas, daily
\nas saying in Paris on Tuesday.<\/p>\n
The 27 government and institutional creditors who attended the
\nmeeting praised the robust performance of Indonesia's economy and
\ncommended the country's sound macro-economic management as well
\nas the latest package of reform measures in May, the newspaper
\nreported.<\/p>\n
Nonetheless, they qualified their commendations with strong
\nappeals to the Indonesian government to pursue a more vigorous
\ndemocratization process and to make more concerted efforts to
\ndevelop good governance, Kompas added.<\/p>\n
The central theme of the creditors' suggestions was very
\nsimilar to the observations made by the World Bank in its 1995
\nreport on Indonesia.<\/p>\n
The Japanese delegation, besides asking for more
\ndemocratization and better governance, also called for better
\nprotection of human rights.<\/p>\n
Japan, the largest single creditor, also suggested that the
\ngovernment improve efficiency, transparency and accountability
\nwith regard to its use of foreign aid.<\/p>\n
The American delegation suggested that the government minimize
\ndirect market intervention and abolish other forms of market
\ndistortion to enhance fair competition.<\/p>\n
It supported the World Bank's suggestion that the Indonesian
\ngovernment improve regulatory frameworks, increase domestic
\ncompetition and develop efficient rules of the game for the
\nbusiness sector.<\/p>\n
The World Bank Report on Indonesia, which was the main
\nreference for the creditors in assessing Indonesia's economic
\nperformance, observes, among other things, that many restrictions
\non domestic trade still hinder efficiency and contribute to a
\nhigh-cost economy.<\/p>\n
The World Bank, which is considered the opinion-leader among
\nthe creditors, also called on the government to address the
\nproblems of industry cartels, price controls, entry and exit
\ncontrols, exclusive licensing, public sector dominance, non-
\ntransparent government bidding and procurement processes and
\ngovernment intervention in favor of specific firms or industries.
\n(hen\/vin)<\/p>",
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