Govt asks World Bank to drop 1% advanced fee for loans

JAKARTA (JP): The government is asking the World Bank to drop a one percent advanced fee it has to pay once it signs a new "project loan" with the bank, National Development Planning Board (Bappenas) deputy chairman Hidayat Syarief said.

Hidayat said on Thursday that the advanced fee was burdensome for the government.

"The World Bank requires that one percent (of the loan) is paid up front. It is a new scheme," he told reporters on the sidelines of a consultation gathering between the government and some 20 non-governmental organizations (NGOs) ahead of the Feb. 1 to Feb. 2 Consultative Group on Indonesia (CGI) meeting here.

CGI is a grouping of Indonesia's major donors led by the World Bank.

"This (advanced fee) is burdensome ... we have proposed this to be revised, but the World Bank will make a decision at its board of directors meeting in Washington," Hidayat said.

He said the advanced fee was on top of the usual commitment fee, which ranges between 0.25 and 0.75 percent, and interest rate.

He said that the advanced fee was imposed last year, when the World Bank withheld its project loans as it shifted its priority to social safety net programs to help the poor in surviving the economic crisis.

The World Bank, however, did not impose an advanced fee for its program loans, Hidayat said.

Program loans are those used to finance the government's programs, including the social safety net, while project loans are used to finance infrastructure development and basic education.

Hidayat added that other international lenders, like the Asian Development Bank, did not impose such fees on their programs or project loans.

He said this issue would not likely be discussed at the CGI meeting because it was an internal matter of the World Bank.

"But if the government raises the issue of interest rates and commitment fees with the loans, the problem with the advanced fee could also be discussed at the CGI meeting," Hidayat said.

Meanwhile, the International NGO Forum on Indonesian Development (INFID) called on the country's major donors grouped in the CGI to provide support for the three-month-old administration of President Abdurrahman Wahid in solving the country's economic and social problems.

The group of NGOs said Abdurrahman's government was elected through the country's first democratic election process in more than 40 years.

"This is the first time we have ever asked the donors to support the (Indonesian) government," INFID executive secretary Binny Buchori told a media conference following a meeting with the government and World Bank officials.

She said INFID had voiced strong criticism toward the previous authoritarian regime of Soeharto.

She said the meeting was unprecedented as the previous government never consulted the NGOs prior to signing a new loan with the country's donors.

She explained that NGOs continued to put pressure on the government to seek a 30 percent debt relief, which was somewhat equal to the amount of foreign loans corrupted by the previous regime during its 32 years in power.

"But the government insists that it's impossible to ask for debt relief. The government, instead, promises to seek debt rescheduling," Binny said.

Indonesia is seeking to reschedule some US$2.1 billion of its sovereign debts this year.

The government has also said it expects to get $4.1 billion in new loans from its donors in CGI in the April-December budget year.

Binny said the NGOs called on the foreign donors to push the government of President Abdurrahman to lessen the social political role of the powerful military and to fight human rights violations in the country.

"The CGI must support the government on this matter," she said. (rei)