Thu, 13 Sep 2001

ADB pledges strong support for RI

JAKARTA (JP) : Asian Development Bank president Tadao Chino reiterated the bank's strong commitment to support the government in implementing economic reform program.

Chino made the statement Wednesday during a meeting with President Megawati Soekarnoputri.

"Indonesia faces many challenges but I am confident that under the leadership of President Megawati more hopeful times lie ahead," he said in a statement.

ADB is one of Indonesia's largest donors together with the World Bank and Japan.

The government has planned to meet with the country's traditional donors grouped in the so-called Consultative Group on Indonesia (CGI) in November to seek loan to help finance the 2002 state budget. Last year, the grouping pledged some US$4.8 billion in loan to help plug the current 2001 budget deficit.

On ADB's loan commitment to Indonesia, Chino said that the bank would maintain its lending level for the country at between $600 million-$1.2 billion per year.

"How much we lend will depend on the country's needs as well as its capacity to effectively absorb our assistance," said Chino in his first visit since Megawati assumed power in July.

ADB said earlier this year that Indonesia could obtain a high case lending scenario if it managed to secure a deal with the International Monetary Fund, and showed strong commitment to continue reform program including curbing corruption and improving good governance.

The IMF approved Tuesday the government's new letter of intent (LoI), clearing the way for the disbursement of the Fund's $395 million loan tranche to the country. The IMF money is expected to improve the confidence of investors and creditors in the country including ADB and the World Bank.

The Fund suspended its loan program to the country late last year amid signs that the previous government was dragging its feet in implementing agreed reform agenda.

Chino said that the nature and pace of the ongoing reforms will determine the extent of ADB assistance to the country.

Earlier on Tuesday, Chairman of the Investment Coordinating Board Theo Toemion announced a set of policy investment initiative as a precondition for the release of the ADB assistance.

The policy initiative includes measures to improve the investment climate in the country and launching a new investment law.

Chino said that ADB was willing to work closely with the government in combating corruption, improving governance and promoting decentralization.

ADB assistance has been aimed at reducing poverty and regional disparities by strengthening Indonesia's institutions, promoting private sector development, supporting initiatives in less developed areas, investing in human and social development and strengthening environmental management.

The two leaders also discussed the ongoing process of decentralization, which is expected to play a significant role in improving governance and providing public services more efficiently and effectively in Indonesia.

Ongoing ADB assistance to Indonesia includes a loan to support the country's decentralization program.

ADB also supports projects to decentralize health services delivery and strengthen local government capacity to manage coastal resources.(11)