WB to boost lending to Indonesia<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The World Bank announced on Wednesday its commitment to increase
\nloans to the country in the next four years to help lift millions
\nof Indonesians out of poverty, provided the government makes
\ngreater efforts in its anticorruption and good governance drives.<\/p>\n
The bank, as stated in its country assistance report for July
\n2003 to June 2007, would provide US$450 million to $850 million
\nin loans per year -- higher than an average of some $400 million
\nin loans over the past three years.<\/p>\n
Bank country director for Indonesia Andrew Steer told a media
\nbriefing on Tuesday that the forthcoming loans were aimed at
\nfinancing various health programs and projects to help alleviate
\npoverty, as well as to build power plants and other
\ninfrastructure projects.<\/p>\n
Despite the higher commitment, the loans remain much lower
\nthan the average of about $1.3 billion in loans disbursed
\nannually in the mid-1990s.<\/p>\n
However, in the event of the country accelerating its key
\nareas of reform -- improving the investment climate,
\nstrengthening the public service sector and improving governance
\n-- the bank would be prepared to provide even higher funding for
\nIndonesia. In that event, the report said, Indonesia would be
\neligible to obtain annual lending of up to $1.4 billion, in what
\nthe bank referred to as the "high-case scenario."<\/p>\n
Consequently, Indonesia has to strenuously tackle corruption
\n-- both through taking action and the regulatory framework -- and
\nimprove the economy, banking and legal system.<\/p>\n
The bank acknowledged that rampant corruption and poor
\ngovernance were the underlying reasons for low investment and
\nweak service supervision, which has, in turn, prevented progress
\nin reducing poverty.<\/p>\n
Currently, investment remains scarce due to failure to address
\nthose problems, depriving the economy of its engine and putting a
\nlid on higher economic growth -- the perfect recipe for reducing
\npoverty.<\/p>\n
Earlier, the bank identified the need for investment in
\ninfrastructure projects as a priority, to help stimulate the
\neconomy. Currently, Indonesia is ranked among the poorest in the
\nregion in term of infrastructure networks.<\/p>\n
While income poverty here has fallen from 27 percent of the
\npopulation in 1999 to 16 percent today, no fewer than 110 million
\nIndonesians currently live on less than $2 per day and remain
\nvulnerable to slipping back into poverty. The level of poverty
\ncould be cut to 10 percent by 2007 only if significant progress
\nwere made in improving the investment climate and the delivery of
\npublic services here, it added.<\/p>\n
"The high hopes that the Reformasi movement would break the
\nhold of vested interests and the corruption, collusion and
\nnepotism that characterized the later years of the Soeharto era
\nhave not been realized," the report said.<\/p>\n
"Corruption poses a special problem for Indonesia, and the
\nbank aims to integrate governance and corruption issues through
\nthe entire Indonesia program, shaping how projects are selected,
\ndesigned, implemented and monitored."<\/p>\n
World Bank 2003 to 2007 lending allocations:<\/p>\n
1. Community-Driven Development: Around 25 percent of total
\nlending (around $200 million) would be allocated for this program<\/p>\n
2. Local Services Platform: Around 40 percent of lending would be
\nallocated to help create accountability in local government<\/p>\n
3. Public Utility Platform: Around 15 percent of lending would
\nhelp support investment in good governance and efficiency in
\nwater supply and energy<\/p>\n
4. National Lending Platform: Around 20 percent of lending would
\nbe allocated to address central problems<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/wb-to-boost-lending-to-indonesia-1447893297",
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"sponsor": "Okusi Associates",
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