Govt upbeat about fund for social safety net program
JAKARTA (JP): Major donor countries and organizations have agreed in principle to fund the government's social safety net program in the 1999/2000 fiscal year, according to the chairman of the National Development Planning Board (Bappenas).
"The bulk of the funding will come from large foreign donors. They've given the green light to the continued provision of aid, but have not made any firm commitments on the amount which will be advanced," Boediono told journalists on Thursday.
He explained that the social safety net program was designed both to provide the poor with access to affordable essential commodities and to help them purchase their basic needs through providing paid employment on labor intensive projects.
Labor intensive projects provide people with menial work in exchange for a small wage, usually not more than the regional minimum wage.
"The total budget for labor intensive projects in the current fiscal year is more than Rp 5 trillion," Boediono said.
Boediono also said that the government provided 4 million families with rice at a heavily subsidized price in September.
In July, the government launched a program to provide the country's poorest families with 10 kg of medium-quality rice every month for Rp 1,000 per kg. The price at which the rice is made available is much lower than the current market price of between Rp 2,000 and Rp 2,500 per kilogram.
"The program is expected to cover seven million poor families in October," Boediono added.
The government has said that the program could ultimately reach out to cover 15 million families around the country.
The country's international donors are committed to providing US$14 billion to finance the social safety net program in the current fiscal year.
However, the World Bank warned last month that international support would continue only if the government managed to prevent the funds from being abused by civil servants.
Corruption in the country is seen as being so severe that it has come to threaten the very survival of the poor in this time of economic hardship.
The World Bank also warned on Wednesday that the number of poor people in Asia's crisis-stricken countries could explode due to the lingering crisis. In Indonesia, it has been forecast that approximately half of the population will be living below the poverty line by the end of this year.
Japan is expected to unveil a plan to extend about $30 billion in aid to Southeast Asian nations at the Group of Seven finance ministers meeting this weekend.
"We will study this (the plan). Of course we want to take advantage of the aid," Boediono said.
Rescheduling
He said he also expected creditor nations outside the Paris Club to agree to the rescheduling of principal repayments on government debt on terms similar to those offered by the Paris Club last month.
Under the deal struck with the Paris Club, the repayment of $4.2 billion in bilateral government debt which was to fall due in the next two years was postponed for between 11 and 20 years.
Boediono said that debts to commercial banks were expected to be refinanced, while bilateral debts to non-Paris Club creditor nations would be rescheduled.
"From past experience, once an agreement had been reached with the Paris Club, creditors outside this group usually offer similar terms," he said, adding that the value of government debt falling due this year to the latter group was small.
The government's debts to foreign commercial banks and non- Paris Club creditor nations falling due this year totals $263 million.
The flow of international aid to the country and the rescheduling of sovereign debt has been a major factor in the strengthening of the rupiah against the U.S. dollar in recent weeks.
The rupiah was hovering at around Rp 10,700 to the dollar on Wednesday. (rei)