RI needs $2.4b to $2.8b more loans from CGI: WB<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The World Bank said on Thursday Indonesia would need to obtain
\nbetween US$2.4 billion to $2.8 billion in fresh loans from the
\nConsultative Group on Indonesia (CGI) donors to help finance the
\n2003 state budget deficit.<\/p>\n
Andrew Steer, the bank's country director for Indonesia, told
\na press briefing that the figure, albeit higher than it was first
\nproposed by the government, would still be the lowest since the
\neconomic crisis hit the country in 1998.<\/p>\n
"This (the declining trend) implies nothing but good news, as
\nit means that the country becomes less dependent on foreign
\nfinancing needs," Steer said when unveiling the bank's report on
\nthe country's economic assessment for the upcoming CGI meeting.<\/p>\n
As a comparison, CGI last year pledged financial support
\ntotaling $3.14 billion in loans and $568 million in grants and
\ntechnical aid.<\/p>\n
The World Bank will be a co-host with the government at the
\nCGI meeting which would take place on Jan. 21-22 in Bali.<\/p>\n
CGI is a grouping of the country's largest foreign lenders.<\/p>\n
The 2003 budget deficit was initially projected at Rp 26.3
\ntrillion (about $3 billion), but the forecast is widened to Rp
\n34.4 trillion after the Oct. 12 Bali bombing incident prompted
\nthe government to provide about Rp 10.6 trillion worth of fiscal
\nstimulus to help cushion the impact.<\/p>\n
The government will ask the CGI to help plug this deficit,
\nwhile the remainder would come from domestic sources, including
\nthe use of some of the proceeds from the privatization program
\nand sales of assets under the Indonesian Bank Restructuring
\nAgency (IBRA).<\/p>\n
In its report, the World Bank painted a positive picture in
\nits economic assessment on the country, saying that despite some
\ndiscouraging signs in its trade policies, Indonesia had made
\nsignificant progress with some economic reforms.<\/p>\n
"Structural reforms have remained on track. It accelerated
\nafter the Bali bombing, where the government renewed its efforts
\non a wide front," it said.<\/p>\n
The progress was reflected in further sales of assets and a
\nbank under the supervision of IBRA, further privatization of
\nstate companies and the passage of the Law on an Anti-Corruption
\nCommission.<\/p>\n
While IBRA's assets sales continued, the government managed
\nalso recently to sell a majority stake in recapitalized Bank
\nNiaga, and a 42 percent stake in state-owned telecommunications
\nfirm PT Indosat.<\/p>\n
As an important member of the CGI, the Bank's assessment would
\nprove crucial for other members to determine whether to give
\ntheir vote of confidence on the country.<\/p>\n
However, despite the progress, there were also worrying signs
\nwith regard to certain government policies, especially in the
\ntrade sector, which recently saw the application of new,
\nprotectionist tariff and non-tariff measures on certain
\ncommodities including sugar, clothes and textile.<\/p>\n
The World Bank said that as such provided signals that the
\ngovernment moved to a protectionist stance, which run against the
\ninterests of many creditor nations.<\/p>\n
Particularly worrying was a plan to increase the import tariff
\non rice, a measure that would hurt the poor, it added.<\/p>\n
In another part of the report, it also noted that the
\ngovernment should maintain the macroeconomic stability while also
\npursuing reform actions that could accelerate growth, create jobs
\nand reduce poverty, such as improving the domestic investment
\nclimate and legal reform.<\/p>\n
"A weak investment climate and legal system are holding back
\neconomic growth," Steer said.<\/p>\n
Concrete steps that the government could take to improve the
\ninvestment climate are cut short the long and cumbersome
\nbureaucracy, balancing labor regulations for the benefit of both
\nemployee and employers and clarifying the confusing
\ndecentralization program (autonomy law).<\/p>",
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