Half of RI's WB projects at risk

Half of RI's WB projects at risk

WASHINGTON (Agencies): More than half of the World Bank's ongoing portfolio of projects in Indonesia were at risk of failure, the bank said in a report Thursday.

"They have not failed; they are at risk, which means we have to concentrate on finding out how to salvage them, restructure them, cancel them, renew them," Robert Picciotto, director- general of the operations evaluation department, told a news conference at the launching of the report here.

The report said that financial turmoil in East Asia had sharply increased the number of World Bank projects in the region plagued by problems and has nearly doubled the percentage at risk of failure.

More than 16 percent of World Bank projects in East Asia faced "serious problems" in 1998, up from 10.5 percent in 1997 and 4.7 percent in 1993, according to the World Bank's Operations Evaluation Department.

It said 27.5 percent of the bank's projects in the region were at risk of not achieving their objectives in 1998, up from 14.6 percent in 1997 and 10.5 percent in 1993.

"What we have, following the East Asia crisis, is a major job of reevaluating our ongoing portfolio."

He conceded that too much focus has been placed on macroeconomic figures and too little on the structures in the economies trying to cope with economic crisis.

These institutions include the governments themselves, the judicial and financial systems and corporate laws, he added.

Picciotto said the Asian crisis has trigged a "total debacle in the transition economies," with the number of people in poverty set to leap to 168 million from 14 million.

"We have lost at least a decade of development in Indonesia," he lamented.

The World Bank did not spell out the problems facing specific projects in specific countries.

But as a rule, when the World Bank lends money to a government to fund a project, it spells out targets. It may set a timetable for construction of roads and schools or ask the government to change certain economic policies before more money is paid out.

The International Monetary Fund, the World Bank and other lenders have responded to the turmoil by rushing billions of dollars in aid to the hardest-hit states -- Indonesia, South Korea and Thailand.

The World Bank said the number of problem-plagued projects in Asia could increase in the months ahead if growth does not pick up. "We have not yet probed the downside," Picciotto said. "The risks are higher."

He added that if the approach taken by the development community isn't changed, it will only be "treating the symptoms, not the fundamental disease" behind the crisis plaguing many developing countries.

One solution being used more widely within the World Bank is to provide money for projects in installments, rather than in a single disbursement, to give it a lever to argue for wider reforms, Picciotto said.