Sat, 12 Mar 2005

ADB to provide $300m for Aceh reconstruction

Urip Hudiono, The Jakarta Post/Jakarta

The Asian Development Bank (ADB) will provide an additional US$300 million in grants for the reconstruction of tsunami- stricken Nanggroe Aceh Darussalam and parts of North Sumatra.

The money will be part of the $600 million in additional funds that the Manila-based bank is to provide out of its Asian Tsunami Trust Fund to five badly hit countries in the region: India, the Maldives, Sri Lanka, Thailand and Indonesia.

The additional money will bring the ADB's total financial commitment to the tsunami-affected areas to $775 million, including the $175 million it had pledged from the reallocation of ongoing projects for tsunami-related relief efforts.

Previously, the ADB had provided an emergency soft loan of $126.37 million for Aceh and North Sumatra out of funds originally earmarked for 13 ADB projects in Indonesia to address immediate and short-term requirements in humanitarian relief efforts and repairing critical basic services.

ADB president Haruhiko Kuroda said he hoped the additional money could be promptly disbursed for projects to restore essential infrastructure and services.

"The disbursement of the funds is essential to ensure that the incomes and livelihoods of people in the area are quickly restored," he said, after witnessing the signing of a memorandum of understanding on the additional funds on Thursday by ADB director general for Asia and the Pacific Shamshad Akhtar and State Minister for National Development Planning Sri Mulyani Indrawati.

Kuroda said the $300 million would be used to finance a two-phase, multi-sector Earthquake and Tsunami Emergency Support Project (ETESP) to support disaster management, reconstruction and rehabilitation in the affected areas of the two provinces.

The first phase would last from April to June 2007, and would involve the tackling of urgent priorities in some of the less devastated areas.

"These include projects on health services, rural water and sanitation, irrigation and flood control, restoration of roads and bridges, local government capacity building and spatial planning," Kuroda said.

The second phase would run from June 2007 until April 2008, and would involve disaster management and reconstruction activities in the most devastated areas.

"The work will include continuing the first phase activities, especially spatial redesigning, as well as the restoration of community infrastructure, rural electrification and public administration," he added.

To ensure that the money reached the intended targets, the ADB would set up a treasury office in Aceh and sponsor a ministerial- level conference on March 18 in Manila to monitor the progress made and share information on fund management.

"We are also open to cooperating with public auditors to monitor the funds," he said.

The Supreme Audit Agency (BPK) has stated that it intends to audit donor funds for Aceh, while the Ministry of Finance also plans to open a treasury office in the province.

Meanwhile, Mulyani gave assurances that the additional funds would be used to finance Aceh's reconstruction, the blueprint for which is expected to be finished by the end of March. She also expressed the hope that the ADB grant would encourage other donors to give aid in the form of grants.

The Consultative Group on Indonesia (CGI) has already pledged a preliminary commitment of $1.2 billion in grants and $500 million in interest-free loans for Aceh, apart from $3.4 billion in new loans from the group for Indonesia this year.

Mulyani said the government would likely need up to Rp 10 trillion (US$1.07 billion) for the reconstruction of Aceh this year and Rp 45 trillion over the next five years. The government had previously assessed material losses and damage in the province at $4.5 billion.