Indonesia secures special IDA loans from World Bank<\/p>\n
JAKARTA (JP): The World Bank has granted Indonesia greater
\naccess to its International Development Association (IDA) loans,
\nwhich carry almost zero percent interest rates, following
\nprogress on the country's economic reforms and its commitment to
\nfight corruption.<\/p>\n
World Bank president James Wolfensohn said the bank may extend
\nand expand the IDA facility on the back of Indonesia's continued
\nreforms progress.<\/p>\n
"Given the government of Indonesia's post-crisis debt burden,
\nthe World Bank has granted Indonesia temporary access to highly
\nconcessional IDA resources, which have zero interest and a 35-
\nyear repayment period," Wolfensohn said after a meeting on
\nThursday in Washington with President Megawati Soekarnoputri, who
\nis on a nine-day visit to the United States.<\/p>\n
Meanwhile, State Secretary Bambang Kesowo said the
\nInternational Monetary Fund (IMF) had agreed to Indonesia's
\nrequest for lighter debt repayment terms, and joint efforts to
\nreduce the country's debt burden.<\/p>\n
President Megawati Soekarnoputri made the request in a meeting
\nwith IMF Managing Director Horst Koehler, Bambang said.<\/p>\n
She further asked the IMF not to tighten conditions over
\nIndonesia's debt repayments, to which the IMF also agreed, he
\nsaid.<\/p>\n
The World Bank's IDA facility is normally reserved for
\nextremely poor countries whose economies are too weak for loans
\ncarrying commercial terms.<\/p>\n
Even though Indonesia does not rank among them, its huge
\nforeign debts pose a constant threat to its budget's
\nsurvivability.<\/p>\n
Last month, the World Bank extended some US$440 million in new
\nloans, of which over one-third was based on IDA terms.<\/p>\n
Wolfensohn said the World Bank planned to increase lending on
\nthese concessional terms.<\/p>\n
However, the bank tightly links its loan program to progress
\nmade in battling corruption and reforming the economy.<\/p>\n
A lack of effort in these areas has deferred the inflow of
\nforeign capital, and thus undermined Indonesia's debt repayment
\ncapacity.<\/p>\n
"Indonesia's weak legal and judicial system is harmful to the
\ninvestment climate, impeding efficient bank and corporate
\nrestructuring," the World Bank said in a statement.<\/p>\n
Thus far, the absence of concrete results in legal reforms has
\nbeen overshadowed by the recent progress on the economic front.<\/p>\n
"I am greatly encouraged by how quickly President Megawati and
\nher economic team reacted to stabilize the economy through
\nnegotiation of the Letter of Intent (LoI)," he said referring to
\na lending agreement with the IMF.<\/p>\n
The LoI contains a set of economic reform targets, which
\nIndonesia must comply with to obtain financial aid from the IMF.<\/p>\n
Megawati's economic team secured a new LoI after just one
\nmonth in office, ending an eight-month deadlock over talks on the
\nLoI with the fund.<\/p>\n
The IMF's stance toward Indonesia has become a benchmark for
\nthe World Bank and other financial institutions in dealing with
\nthe country.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti said Indonesia needed the IDA facility, especially after
\nlast week's terrorist attacks in the States had stoked fears of a
\nglobal recession. (dja\/bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-secures-special-ida-loans-from-world-bank-1447893297",
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