Experts urge government, CGI to prioritize corruption issue

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)