CGI to discuss financial aid to RI next month

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)