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

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)