ADB to grant $3.27b in fresh loans to Indonesia

Dadan Wijaksana, The Jakarta Post, Jakarta

The Asian Development Bank (ADB) has announced a lending program to Indonesia of up to US$3.27 billion to be dispersed in over 30 loan projects over the next three years.

"The program will carry out a balanced mix of poverty reduction programs, accounting for 57 percent of the 30 projects planned, along with other assistance to promote growth," ADB principal programs coordination specialist Shiladitya Chatterjee said in a statement on the bank's web site on Wednesday.

The lending projects will be carried out under the ADB's Country Strategy and Program (CSP), an update of which was endorsed by the bank's board of directors on Wednesday.

CSP is annually updated to take into account the continued relevance of the program, its implementation and the bank's operational program for the next three years.

"The update concentrates ADB's assistance more on the primary focus areas of the strategy so that more intense attention can be paid to their design and implementation, and targeting them more geographically," David Green, country director of ADB's Resident Mission, said.

ADB's CSP for Indonesia, finalized in 2002, addresses the main medium-term needs of the economy, stressing improvements to governance, meeting local needs through decentralization, human development, environmental management and raising the country's long-term growth potential.

The statement also said there had been steady reduction in poverty incidence in the country. After reaching its peak of 23.5 percent of the population, the figure had decreased to 18.2 percent by the end of last year.

"However, rural poverty remains high as a result of poor agricultural performance," it added.

While high level economic growth is the obvious answer to resolve poverty problems, Indonesia has been lagging in its efforts, growing only by a modest level of between 3 percent and 4 percent over the years.

Complementary to the loans, a technical assistance program of $12 million to $14 million per year is planned.

Since joining the ADB in 1966, Indonesia has received 263 loans totaling $19.1 billion, of which 62 projects were active at the end of 2002. This came on top of 433 technical assistance grants totaling $200 million.

30 projects in next three years

1. Seven projects in the agricultural and natural resources sector, which include community-based land rehabilitation, flood management in rivers in Java, enhancement for tree crops, water resources management, fisheries and coastal resources, and rural sector development. 2. Energy and transportation projects, which include road rehabilitation, interisland transportation, airport rebuilding, air quality improvement. 3. Nine projects in social infrastructure projects, which will improve water supply services, education, housing finance and social protection. 4. Industry and finance projects, which include assistance for local governments and state enterprises.