Experts urge government, CGI to prioritize corruption issue

JAKARTA (JP): Experts called on the government and the country's major donors grouped in the Consultative Group on Indonesia (CGI) to prioritize corruption in its next meeting.

Gajahmada University economist A. Tony Prasetiantono said on Friday the issue was crucial because the cost of massive leakages in the government's foreign borrowings in the past should not only be borne by Indonesia alone but also by the donors, particularly the World Bank.

"The World Bank can't just escape responsibility," Tony said on the sidelines of a seminar on the economy.

He explained that although the bank kept insisting that it had not been involved in controlling the use of the loans, it was well known that the previous authoritarian government of Soeharto had misused the loans from year to year.

"They (the World Bank) kept lending money from year to year, even more than the (previous) government asked for. This means the bank ignored the (corruption) problem. So it should be held responsible as well," he said.

The World Bank leads the CGI, which is scheduled to hold a meeting on Tuesday and Wednesday in Jakarta for the first time.

The CGI is expected to provide the country with new loans worth more than US$4 billion to help finance the country's April to December 2000 state budget deficit.

Reports claim that some 30 percent of the country's sovereign debts were embezzled by government officials. But both Indonesia and the bank have denied the reports.

Economist Didik Rachbini of the Institute for Development of Economics and Finance (Indef), a private think tank, said the government should not sign any new loan agreements with the CGI unless there was an evaluation of past mistakes.

He said the World Bank should also bear the cost of the mistakes.

"Projects related to World Bank financing were so inefficient due to large markups ... The World Bank must be held morally responsible," Didik said.

"The World Bank kept financing projects that were actually not needed by the people ... Why should we pay for projects that will only turn into rust?

"The upcoming meeting should not be just a normal one. We (the government) must be more critical," Didik said.

"What needs to be done is to evaluate the past mistakes and decide how to share the cost."

Didik said the government should also demand a debt reduction from the World Bank as a consequence of the responsibility of the bank over the mistakes of the past.

Non-governmental organizations have also demanded that donors provide the country with debt relief because part of the loans had been abused.

But the World Bank has insisted that Indonesia was not in the category of very poor nations eligible for debt relief.

The bank has also warned that any debt relief would create negative investor sentiment toward the country.

The government has also said it would only seek debt restructuring, not debt relief.

Indonesia plans to reschedule more than $2 billion in sovereign debt in the 2000 budget year.

But Tony said donors should consider providing Indonesia with a debt reduction if the new democratically elected government of Abdurrahman Wahid could prove its determination to fight corruption.

He said a debt reduction would help ease the country's burden in dealing with the economic crisis.

Indonesia owes more than $70 billion in sovereign debt.(rei)