CGI to discuss financial aid to RI next month

JAKARTA (JP): Members of the Consultative Group on Indonesia (CGI) will convene in Paris at the end of next month to find ways to help the country extricate itself from the crisis.

World Bank country director Dennis de Tray said here yesterday that the meeting, to be held July 29 and July 30, would be "slightly different" from the usual CGI meetings because the situation here was totally different from the past.

"We will focus on much narrowed issues -- the monetary crisis and social safety net issues. In those areas, we are working as hard as we can to prepare the groundwork for that meeting."

He said the meeting could be used by the government to get more aid commitments from donor countries, on top of the US$43 billion bailout package arranged by the International Monetary Fund, to finance its huge fiscal deficits.

"It (the government) needs more money than it's going to get. It needs a huge amount of money. Fiscal debt ... is going to be large. And how to finance that is going to be a major, major problem."

De Tray said the meeting in Paris would involve "different sets of resources" than the IMF bailout package. "That will be a separate deal."

CGI, led by the World Bank, has provided some $5 billion in assistance each year to Indonesia since its inception in 1992 when it replaced the Dutch-led Inter-Governmental Group on Indonesia (IGGI).

De Tray said the World Bank had already assembled officials and individuals from the government, international financial institutions, donor countries, the private sector and some UN agencies for a series of informal meetings to assess the situation and try to help the poor to withstand the crisis through social safety net programs.

At yesterday's meeting, for instance, representatives from the government presented to the meeting about the government's proposals to prevent more school dropouts by providing block grants to primary schools and simple scholarships for junior and senior high school students.

De Tray said a lot of "long-term friends of Indonesia" were eager to help the country, but the problem was how to coordinate their assistance.

He said the World Bank wanted to develop a partnership with the National Development Planning Board and international agencies to coordinate foreign assistance.

"When the situation is stabilizing, there will be a tremendous desire from the international community to step in and help Indonesia," he said.

De Tray also reported yesterday about the World Bank's decision to resume lending to Indonesia with a $225 million rural development loan.

The loan would directly be channeled to subdistricts and villages through the people's representative body at the village level, called LKMD.

However, de Tray said disbursement of additional World Bank money -- including $1 billion in a structural adjustment loan to help reinvigorate the battered economy -- remained on hold, and would require further review by the bank and the IMF.

He said the review, especially to restructure the state budget and adjust macroeconomic targets to the reality of the situation, would be conducted together with government officials next week. (rid)