Indonesia seeks support in implementing regional autonomy<\/p>\n
JAKARTA (JP): The government is lobbying the World Bank, the
\nInternational Monetary Fund (IMF) and other international donors
\nto help Indonesia overcome feared budget shortfalls following the
\nimplementation of wider regional autonomy next year, finance
\nminister Prijadi Praptosuhardjo said on Saturday.<\/p>\n
Prijadi said the government expected the donors to confirm
\ntheir support at the October gathering of the country's donor
\ngroup, the Consultative Group on Indonesia (CGI), in Tokyo.<\/p>\n
\"We are lobbying donors in that direction,\" Prijadi told The
\nJakarta Post in a telephone interview from Prague,
\nCzechoslovakia.<\/p>\n
He declined to provide details, however, as he had to rush for
\na meeting.<\/p>\n
Prijadi, Coordinating Minister for Economic Affairs Rizal
\nRamli and acting governor of Bank Indonesia Anwar Nasution are in
\nPrague lobbying international donors gathering there for an IMF
\nand World Bank annual meeting.<\/p>\n
Indonesia is seeking around US$4.8 billion of loans to help
\nplug the 2001 state budget deficit in the upcoming CGI meeting.<\/p>\n
Indonesia's economic team met with top IMF officials on
\nSaturday. On Friday, they met with key people at the World Bank.<\/p>\n
The government plans to implement regional autonomy and
\nintergovernmental fiscal balance laws early next year.<\/p>\n
There has been concern that the new laws, which give
\nprovincial administrations more authority to manage local
\nresources, will impact negatively on the state budget, especially
\nin the short term.<\/p>\n
It is feared that provinces with abundant natural resources
\nlike oil, timber and mining commodities will demand a greater
\nportion of the revenue earned from them. This will mean less
\nfunds for the central government, which will still have to
\nfinance national programs, including supporting regions lacking
\nin natural resources.<\/p>\n
Provincial autonomy will also allow local administrations to
\nmanage their own economies, including the right to issue bonds to
\nhelp finance development programs.<\/p>\n
Rizal was quoted by Antara as saying that provincial bonds
\ncould be a huge problem to the national economy, especially if
\nprovinces issue bonds at the same time as happened by China,
\nColumbia and other Latin American countries in the 1980s.<\/p>\n
He said in that in China provincial administrations rushed to
\nissue bonds and it turned out that they could not repay them. The
\ncentral government had to take over, seriously straining the
\nstate budget as well as the overall macroeconomy, he warned.<\/p>\n
He said that to prevent this from happening an institutional
\nframework must be first set up before provincial administrations
\nwere allowed to issue bonds.<\/p>\n
\"In the short term, there could be problems that must be
\nimmediately resolved. That's why we need to first set up an
\ninstitutional infrastructure and regulations ...\" he said.<\/p>\n
Rizal said that regional autonomy would bring positive impacts
\nto the provinces over the long term, including infrastructure
\ndevelopment and better welfare for the people.<\/p>\n
He also said the policy would help maintain the nation's
\nunity.<\/p>\n
Several provinces with rich natural resources have recently
\nseen increasing demands for separation from Indonesia. (rei)<\/p>",
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