Govt asks ADB, World Bank for help to rebuild infrastructure

Rendi A. Witular, The Jakarta Post/Jakarta

The government will ask the Asian Development Bank and World Bank for their financial support to help rebuild infrastructure in Aceh, severely-damaged by a massive earthquake and tsunami.

Minister of Finance Jusuf Anwar said on Tuesday that it would soon ask the two international donor agencies to start disbursing US$3 billion in combined undisbursed loan commitments for that purpose.

"The government is going to try and persuade the ADB and the World Bank to switch unproductive and undisbursed loans as emergency assistance for Aceh.

"We would allocate some of the loan funds to rebuild infrastructure in the province," Jusuf told reporters.

Jusuf added that at present, undisbursed loans from the World Bank and ADB stood at $1 billion and $2 billion respectively. The two multilateral agencies have been the country's main donors.

The government has already allocated Rp 50 billion, taken from the 2004 state budget, for emergency assistance to victims in the tragedy-hit areas.

Aceh and North Sumatra provinces were the hardest hit by the powerful earthquake, and by towering waves of tsunami that on Sunday swept through villages and towns in the two provinces, leaving thousands killed and countless homeless.

The tragedy -- the worst in decades -- has also left infrastructure destroyed, including road networks, seaports, buildings, and power plants.

While the financial requirements to rebuild infrastructure has yet to be determined, it is obvious that the government will need outside help to do such extensive work, in view of the huge constraints it already faces in its state budget.

The government is already struggling to keep the deficit below Rp 26.3 trillion, as targeted in the state budget for this year, with soaring oil prices pushing up significantly allocations for fuel subsidies.

In fact, the government plans to gradually reduce subsidies starting next year as a way of easing pressure on the annual state budget.

Elsewhere, when asked about the impact of the disaster on the overall economy, Jusuf said,"I think the impact will be relatively limited. What's important is that we try our best so that Aceh can recover quickly."