ADB links Indonesia aid to reform, better governance
ADB links Indonesia aid to reform, better governance
MANILA (Agencies): The Asian Development Bank (ADB) said on Saturday it was prepared to lend Indonesia between US$600 million and $1.2 billion a year over the next three years, provided the government pressed ahead with key reforms.
Indonesia must boost its efforts to reduce poverty, strengthen governance and improve macroeconomic stability, the Manila-based multilateral institution said, if the country is to qualify for assistance at the top end of the lending range.
Other conditions to qualify Indonesia for assistance at the higher end of the lending range are resolving problems in decentralization, including giving more authority to local governments and improving the implementation of ADB projects.
The conditions are part of the new "country operational strategy" for Indonesia approved by the ADB earlier last week.
The bank did not give details on the specific criteria it was setting for Indonesia nor did it say to what extent it would cut loans if they were not met.
Indonesian Coordinating Minister for the Economy Rizal Ramli said earlier on Friday his country welcomed the new strategy and called for the ADB to provide a higher level of its concessionary resource, the ADB Special Fund, for programs focusing on poverty reduction and balanced growth.
"The ADB would be flexible and responsive to the country's changing political and economic conditions over the next three years and continue to support policy reforms," ADB's director for Indonesia mission Jan van Heeswijk said in a statement.
"However, without improved governance, ADB's programs will not have a sustainable impact on poverty."
Indonesia would also need to do more to improve the implementation of ADB projects to make more efficient use of lending resources, the statement said.
The ADB said the loan package was part of its new country strategy for Indonesia, which focuses on the need for policy reforms.
Indonesia borrowed about $1.2 billion annually before a devastating economic crisis hit Asia in 1997. During the crisis, lending commitments increased substantially to $1.8 billion in 1998 and $1.5 billion in 1999, the bank said.
Jakarta has borrowed nearly $17.7 billion to finance key development projects, it added.
The ADB also said it plans to sign a poverty-reduction partnership agreement with Indonesia to improve the bank's new country strategy.