Donors pledge $5.3b in fresh aid to RI

Donors pledge $5.3b in fresh aid to RI

JAKARTA (JP): Donor governments and international lending
agencies led by Japan and the World Bank pledged in Tokyo
yesterday to give Indonesia $5.3 billion in aid this year, Antara
reported.

The pledges were made at the conclusion of a two-day meeting
of the Consultative Group on Indonesia (CGI). The amount is
higher than the $5.26 billion pledged by Indonesia's creditor
group at its meeting in Paris last year.

The decision brought relief to the Indonesian delegation led
by Coordinating Minister for Finance and Economy Saleh Afiff.

There had been concerns that Indonesia's row with Japan, the
United States and the European Union over its national car policy
at the World Trade Organization (WTO) in Geneva would affect the
flow of aid into Indonesia. In addition, Japan, facing budgetary
pressures, has announced it will slash its Official Development
Assistance (ODA) 10 percent.

Antara said the national car controversy was not raised but
some donor representatives raised concerns about human rights,
labor and corruption problems in Indonesia.

Afiff explained that had it not been for the World Bank, which
raised its loan commitments by $300 million to $1.5 billion, the
total amount pledged would have declined.

World Bank representative in Indonesia, Dennis de Tray, was
quoted by Antara as saying in Tokyo the bank's increasing loan
commitments were to support Indonesia's economic growth, poverty
alleviation drive and human resources development program.

Japan remains the largest single creditor with commitment of
213.74 billion yen ($1.88 billion). While its ODA was 3.5 percent
higher compared to last year's, Japan terminated its two-step
loans in its aid package. The net total therefore was lower than
the $1.92 billion Japan pledged last year.

Many other donor governments are also cutting their aid.

The United States cut its aid to $74 million from $84.7
million, Germany to $66 million from $208 million, United Kingdom
to $16 million from $20 million and Canada to $19 million from
$20.5 million.

Denmark, Italy and Sweden did not pledge anything while
Belgium, Finland, Norway and France were still calculating the
amount of their aid.

Indonesian officials said the United States and Japan were
cutting their aid because of budget problems while most European
countries were shifting their aid to African countries.

Another traditionally large creditor, the Asian Development
Bank, pledged $1.2 billion this year, the same as last year.
South Korea increased its commitment to $72.6 million from $38.7
million and Australia to $54.5 million from $50.5 million. Spain
maintained its commitment at $62.5 million.

The World Bank is the chair of the CGI whose members include
18 donor nations and 11 financial institutions. The meeting
agreed to hold next year's meeting in Paris, Antara said.

Japan's aid package for 1997/1998 consists of 195.25 billion
yen in loans through the Overseas Economic Cooperation Fund
(OECF) and 18.5 billion yen in grants and technical assistance.

The Japanese Embassy here said the higher loans to Indonesia
represented its continuing support for Indonesia's economic and
social development, although it was cutting its total ODA budget.

"Japan has thus demonstrated once again its fundamental policy
to provide Indonesia with its utmost support so that it can
implement its development programs," the embassy said.

The 195.25 billion yen loans, carrying an interest rate of 2.7
percent a year, will go towards improving transportation
infrastructure and water resources, preventing natural disasters,
maintaining living environment, encouraging human resources
development and alleviating poverty.

The embassy said the 18.5 billion in grant and technical
cooperation to Indonesia this year would be directed mainly at
poverty alleviation, health and human resources development.
(rid)

Table: CGI loan commitments (in million dollars)

1997/1998 1996/1997
==========================================
A. BILATERAL

1 Australia 54.5 50.5

2 Austria 19.9 23.5

3 Belgium * 16.1

4 Canada 19.0 20.5

5 Denmark 0.0 3.3

6 Finland * 1.1

7 Italy 0.0 6.5

8 Germany 66.3 208.3

9 Japan 1,869.1 1,916.7

10 South Korea 72.6 38.7

11 New Zealand 3.4 3.4

12 Norway * ---

13 France * 100.0

14 Spain 62.5 62.5

15 Sweden 0.0 ---

16 Switzerland 5.4 8.0

17 United Kingdom 16.0 20.0

18 United States 74.0 84.7

-----------------------------------

SUBTOTAL 2,262.7 2,563.8

B. MULTILATERAL

1 World Bank 1,500.0 1,200.0

2 ADB 1,200.0 1,200.0

3 United Nations 37.8 36.6

4 European Union * ---

5 Unicef 13.8 15.1

6 IFAD 25.0 20.0

7 Saudi Fund 20.0 ---

8 IDB 100.0 100.0

9 NIB 40.0 50.0

10 EIB 100.0 50.0

11 Kuwait Fund 0.0 ---

-----------------------------------

SUBTOTAL 3,036.6 2,671.7

===================================

TOTAL 5,299.3 5,260.5

* still being calculated
source: Antara

Editorial -- Page 4