Donors meeting determined to keep Indonesia afloat

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)