Govt decides to stop World Bank water loan
Govt decides to stop World Bank water loan
Muninggar Sri Saraswati
The Jakarta Post/Jakarta
The Indonesian government has rejected the last disbursement of
financial assistance under the Water Resources Sector Adjustment
Loan (Watsal), saying the conditions demanded by the World Bank
for the aid are unfeasible.
National Development Planning Board irrigation department head
Budhi Santoso said recently the decision was recommended by a
national team comprising several ministries related to water
resources management.
"The reason for our refusal is a difference in opinion between
us (Indonesia and the World Bank) about who should manage the
water resources," Budhi said on the sidelines of a workshop on
water held by the Asia Development Bank (ADB) in Bogor, West Java
last week.
He said the World Bank had urged Indonesia to adopt market-
oriented programs and deregulate the industry.
The World Bank's proposal did not match the government's move
toward competence-based development programs, Budhi said.
"Some people may have the capability to manage water, but some
others may not," Budhi said.
The World Bank warned the government last year to cancel its
planned disbursement of the remaining US$150 million of the
Bank's $300 million total commitment to finance the country's
water projects, if the country failed to fulfill its 1999 promise
to privatize the water sector.
The first two disbursements were made in 1999 and 2001,
totaling $150 million.
To comply with the World Bank's demands, Indonesia had passed
the water resource Law No. 7/2004, which privatized the water
sector. The government, however, has not issued the necessary
supporting regulations to enact the law.
The government agreed in 1999 during the severe economic
crisis to reform the country's legislation on water to allow the
private sector to manage the resource.
Budhi denied speculation the cancellation was a result of the
government's failure to issue regulations.
The World Bank could not be reached for comment.
Critics and environmentalists have opposed the water resource
law. They say the law made the resource an economic commodity and
would threaten the poor's access to safe, affordable water.
They have brought the law to the Constitutional Court for a
judicial review.
The World Bank sponsored a similar water privatization
program in Bolivia in 1999, but that program has sparked frequent
protests.