Ginandjar says U.S. govt not behind WB loan delay

JAKARTA (JP): Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita denied on Friday reports that the U.S. government was behind the delay of a World Bank loan disbursement for Indonesia.

He said that the delay in the World Bank's US$1.1 billion loan disbursement until after the June 7 general election was simply caused by Indonesia's inability to meet certain loan conditions before the election.

Anyway, Ginandjar added, Indonesia won't need the World Bank's money at the moment.

"There's no pressure from the U.S. (on the World Bank). I've talked to Lawrence Summers and his staff. They said they never asked for the delay. It's just a misperception," he told reporters at the State Palace.

Lawrence Summers is the Treasury Secretary of the U.S.

The World Bank approved on Thursday two loans worth $1.1 billion for Indonesia, including $600 million to help strengthen the social safety net program designed to help the poor in surviving the economic crisis, and $500 million to support economic reforms, the Bank said in a statement.

The money was the second set of World Bank credits for Indonesia in less than a week after an earlier approval on Tuesday of $400 million loans for poverty alleviation and water resource management.

International lenders have long been worried about the fate of money lent to Indonesia, which has been dogged by years of corruption and crony capitalism. They are anxious not to be seen to be backing one side in the election, and this has influenced the latest lending decisions.

The country, however, won't have access to the loans until after the June general election.

Indonesian officials have conceded that previous funds have been misused by the country's ruling Golkar party. A World Bank document released last August said up to 20 percent of loans to Indonesia in the precrisis years could have been misused.

Press reports had earlier said that the U.S. had asked the World Bank to delay the loan disbursement until after the election for fear that the loans might be used for political purposes.

Several non-governmental organizations also called on the World Bank earlier to delay loans as the ruling Golkar Party was suspected of using the social safety net aid to gain popularity.

Indonesia is to hold its first multiparty election after more than 32 years under the authoritarian rule of former president Soeharto, who stepped down in May last year and hand-picked his protege B.J. Habibie to succeed him.

Habibie was appointed as Golkar's sole presidential candidate last week.

Golkar, which used to win previous elections easily, is now facing serious challenges from opposition parties particularly as three major parties had coalesced to prevent Golkar from ruling the country again.

Analysts said that the delay of the loans may indicate a change of heart on the part of the U.S. government as well as the World Bank toward their long time partner in the region, Golkar.

The World Bank gave approval on the loans after Jakarta agreed not to touch it until after the election.

"We don't need the money immediately," said Jannes Hutagalung, the Indonesian executive director at the World Bank in Washington.

"But we do need the commitment now, so we can plan budget spending over the remainder of the fiscal year," Hutagalung added in a statement.

The World Bank said in the statement that the $1.1 billion loans support its strategic objectives in the country of implementing a comprehensive reform program, while protecting the poor from the severe impact of the country's worst economic crisis in three decades.

"This package is an essential component of the World Bank's commitment to help the International Monetary Fund led program promote a return to stability and growth," the Bank added.

The loans are part of the World Bank's $4.5 billion contribution to the IMF's rescue package for Indonesia agreed to in 1997, at the start of the economic crisis. The IMF bailout package totals $46 billion. (prb/rei)