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.