WB approves new loan program for Indonesia<\/p>\n
WASHINGTON (Agencies): The World Bank approved a new loan
\nprogram for Indonesia on Tuesday worth $400 million a year for
\nthree years and said future aid levels could be higher if
\nsignificant progress was made on economic and social reforms.<\/p>\n
The bank said the lending program could be increased to as
\nmuch as $1 billion a year if Indonesia demonstrated progress in
\nsuch areas as macroeconomic management, bank and corporate
\nrestructuring, and development of a broad-based poverty program.<\/p>\n
The new commitment is much lower than the $1.3 billion average
\nyearly funding pledged by the World Bank in the mid-1990s.<\/p>\n
However, the World Bank will lend the funds under more
\ngenerous terms than previously, reflecting a desire to move from
\na \"crisis\" approach to a renewed emphasis on poverty alleviation,
\nthe bank said in a statement.<\/p>\n
About one third of the total lending under the new program
\nwill be from the bank's concessional lending arm - the
\nInternational Development Association.<\/p>\n
IDA loans, which are interest free and have terms of up to 40
\nyears, would \"ensure a continuing flow of finance for development
\nand poverty reduction without increasing Indonesia's debt-service
\ndemands in the near term,\" the statement said.<\/p>\n
\"The bank will be there to help Indonesia as a long-term
\ndevelopment partner,\" Managing Director Sven Sandstrom said in a
\nstatement. \"Improved governance and progress on the reform
\nprogram will be key determinants of future levels of assistance
\nfrom the World Bank,\" he added.<\/p>\n
The bank congratulated Indonesian authorities on an
\n\"encouraging turnaround\" of the economy after a severe economic
\ncrisis. The bank said it recognized the complexity of the
\nsituation as Indonesia underwent a political transition toward a
\nmore open, democratic society.<\/p>\n
Regional-autonomy laws that took effect on Jan. 1 aim to give
\nthe country's 30 provinces and more than 300 districts a greater
\nsay in running their own affairs.<\/p>\n
The World Bank said recently that it was not happy with the
\ngovernment's progress on decentralization and feared that newly
\nempowered districts and provinces were not ready to deal with
\nfinancial matters.<\/p>\n
Problems with decentralization constituted one reason that the
\nInternational Monetary Fund stalled on $400 million in aid in
\nDecember.<\/p>\n
\"By moving decisively on the key economic and judicial
\nreforms, Indonesia can help restore investor confidence and
\nattract the private investment necessary for it to regain its
\nfooting as one of the emerging economies of Asia,\" Jemal-ud-din
\nKassum, the bank's vice president for East Asia and the Pacific,
\nsaid.<\/p>\n
Indonesia, still suffering badly from that crisis, is one of
\nthe bank's biggest debtors, owing $12.5 billion. The country's
\ntotal foreign debt stood at about $140 billion at the end of
\nSeptember.<\/p>\n
\"Improved governance and progress on the reform program will
\nbe key determinants of future levels of assistance from the World
\nBank,\" Kassum added.<\/p>\n
Indonesia's foreign public debt is already a huge $70 billion,
\nand the government relies on loans from the World Bank and
\nbilateral donor countries to balance its budget.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/wb-approves-new-loan-program-for-indonesia-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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