Donors meeting determined to keep Indonesia afloat

JAKARTA (JP): The Consultative Group on Indonesia (CGI) will start its meeting here on Tuesday amid the country's need for loans and its pressing security and political problems.

Vice President Megawati Soekarnoputri is scheduled to open the two-day gathering of the CGI in Jakarta, the first time the country will host the major donors.

President Abdurrahman Wahid handed over the leadership of the fragile nation temporarily to Megawati as he embarked on a two- week overseas trip starting on Friday.

Donors are expected to reach an agreement to provide the country with between US$4.2 billion and $4.7 billion in new loans to help finance the huge deficit in the April-December 2000 state budget.

The deficit is estimated at 5 percent of the gross domestic product (GDP).

Other financing sources of the deficit are from the sale of banking assets controlled by the Indonesian Bank Restructuring Agency (IBRA) and privatization of state-owned companies.

Non-governmental organizations (NGOs) grouped under the International NGO Forum on Indonesian Development (INFID) urged the donors last week to support the administration of President Abdurrahman in resolving the country's economic crisis and in transforming the country into a new democratic society.

The NGOs met with the government, the World Bank and the lead coordinator of CGI last week in a pre-CGI consultation gathering.

The previous government did not organize a meeting prior to the signing of new loans with the CGI.

It was also the first time the NGOs called on donors to support the Indonesian government. The NGOs have often criticized the previous government, particularly for corrupting the country's overseas loans.

The Netherlands will resume its active role in the CGI meeting. Former president Soeharto discontinued financial assistance from the country's former colonial ruler in 1992 after accusing then Dutch development cooperation minister Jan Pronk of meddling in Indonesia's domestic affairs.

Portugal will also participate for the first time in the CGI meeting but only as an observer. Portugal is the former colonial ruler of East Timor, a former province of Indonesia which decided on independence last year.

In addition to economic reform and democratization issues, other top items on the agenda in the CGI meeting include pressure from the donors for Indonesia to immediately resolve its weak forest management system.

The World Bank said forest mismanagement had caused the country to suffer about $2 billion in losses annually.

But local economists and NGOs have called on the government to put corruption as the top focus of the CGI meeting.

They argued that the corruption issue was more pressing than forestry issues because the cost of massive leakages in the government's foreign loans in the past should not only be borne by Indonesia alone but also by the donors, particularly the World Bank.

Gadjah Mada University economist A. Tony Prasetiantono said that the bank should also be held responsible because it continued to convince the world to lend money to the previous government despite the persisting corruption.

"It's rather ridiculous if the new loan is more linked to forestry than the corruption issue," Tony said.

NGOs have called on the World Bank to provide the country with debt relief or debt reduction as part of its responsibility for the past mistakes. (rei)