Donors pledge $7.9b in aid to Indonesia
Donors pledge $7.9b in aid to Indonesia
PARIS (Agencies): International donors pledged yesterday US$7.9 billion in aid to Indonesia, to be disbursed during the 1998/99 fiscal year which ends in March 1999, the World Bank said.
The World Bank said the amount, together with an exceptional International Monetary Fund package of more than $6 billion announced on July 16, will cover the 1998/99 Indonesian budget deficit, estimated at 8.5 percent of gross domestic product.
The World Bank, which chaired the Consultative Group on Indonesia, said more than 40 donor countries and organizations had pledged money to Indonesia.
The largest single country donor was Japan. It pledged Y187 billion plus a rice loan of 500,000 metric tons for Indonesia this year at the meeting. Japan will also provide additional development aid to Indonesia during the current 1998/1999 fiscal year.
"An enduring commitment to the reforms on which the government has embarked is required to sustain international support and produce, in time, the recovery we all desire," World Bank Managing Director Sven Sandstrom said at the end of a two-day donors' meeting.
The aid announced yesterday and the $6 billion International Monetary Fund (IMF) increased lending comes after a $41 billion IMF-organized rescue package.
Indonesia's economy has been crippled by a severe economic crisis triggered in July 1997 when the Thai baht plunged and dragged down currencies in many of the region's economies. The crisis has devastated the once-thriving economy and led to the downfall of former president Soeharto, whose 32-year rule ended after bloody rioting in May.
Minister of Industry and Trade Rahardi Ramelan said in Jakarta that President B.J. Habibie was pleased by the outcome of the meeting.
"The President said he was very happy with the results of the CGI meeting which showed the trust of friendly countries and international institutions in us," Rahardi said after meeting with Habibie at the Bina Graha presidential office.
"This is proof that friendly countries and multilateral institutions have high confidence in the prospect of reforms and the recovery of Indonesia's economic and political stability."
Rahardi said the President was confident that an improved economic situation could be achieved in September next year.
Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita assured the foreign donors that the government would make every effort to ensure CGI assistance would be used effectively.
"We will make sure the funds you have made available to us will bring direct benefit to all Indonesian people and especially to those who have been most adversely affected by the economic crisis," he said yesterday on the last day of the meeting.
In Jakarta, acting Japanese ambassador to Indonesia Norio Hattori said Japan's $1.65 billion pledge was all "new money" and would be disbursed in the current 1998/1999 fiscal year, ending in March.
Japan's pledged assistance consists of $1.07 billion of sector program loans, $143 million in grants, $121 million in technical assistance and $135 million of rice loans to import 500,000 tons of the food from Japan.
Hattori said the loans carry an interest rate of 1 percent per annum.
He also said Japan would provide additional project loans to the country during this fiscal year.
"At this meeting, it is not possible for Japan to pledge for project-type loans. But Japan is prepared to consider them among others for those projects that need urgent implementation."
Japan disbursed $150 million in sector program loans in May and will disburse another $700 million to finance ongoing Japanese-funded projects here.
It will bring Japan's total lending to Indonesia this fiscal year to $2.5 billion, or about 30 percent of the $8 billion needed by the government to finance its budget deficit.
"So, one third of the money you need to bridge the gap is going to be borne by the Japanese government," Hattori said.
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Table: CGI loan commitments (in million dollars)
1998/1999 1997/1998
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A. BILATERAL
1. Australia 75 54.5
2. Austria 20 19.9
3. Belgium 6 -
4. Canada 25 19.0
5. Denmark 9 0.0
6. Finland - -
7. Italy 5 0.0
8. Germany 300 66.3
9. Japan 1,500 1,869.1
10. South Korea 30 72.6
11. New Zealand 3 3.4
12. Norway 10 -
13. France - -
14. Spain 25 62.5
15. Sweden - 0.0
16. Switzerland 1 5.4
17. United Kingdom 46 16.0
18. United States 250 74.0
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SUBTOTAL 2,305 2,262.7
B. MULTILATERAL
1. World Bank 2,700 1,500.0
2. ADB 2,200 1,200.0
3. United Nations 144 37.8
4. European Union - -
5. Unicef - 13.8
6. IFAD 25 25.0
7. Saudi Fund 25 20.0
8. IDB 400 100.0
9. NIB 30 40.0
10. EIB 40 100.0
11. Kuwait Fund 25 0.0
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SUBTOTAL 5,589 3,036.6
TOTAL 7,894 5,299.3