Indonesia gets World Bank loan to fight poverty

JAKARTA (JP): The World Bank has approved a loan worth US$140 million to support Indonesia's poverty reduction program.

The bank said the program, called the Second Village Infrastructure Project, will accelerate poverty reduction efforts through investments in the rural infrastructure of 2,600 villages in Java and Sumatra.

The project will build upon the accomplishments of the earlier Village Infrastructure Project for Java, a two-year program assisting 1,200 villages in carrying out public works such as road construction and water supply schemes.

Both projects, according to the bank, reflect the Indonesian government's strategy to reduce poverty from its current rate of 14 percent (around 26 million people) to 6 percent (15 million people) by the year 2000.

Indonesia's rapid economic development over the past decade has contributed greatly to its success in reducing poverty. The percentage of the population living at or below the absolute poverty level plummeted from 40 percent in 1976 to 15 percent in 1990. In 1993, the poverty rate stood at 14 percent. However, with Indonesia's large population of about 189 million, the number of absolute poor remained high, at about 26 million.

Poverty affects a greater proportion of the rural population -- 17 million people -- residing in remote areas, marginal uplands, coastal fishing villages or areas too densely populated to support a living through farming.

The island of Java has one of the highest population densities in the world, with 60 percent of the nation's population living on 7 percent of its land. It is home to 56 percent of the nation's poor, while 20 percent live in Sumatra.

Java and Sumatra's 14 million rural poor comprise 70 percent of Indonesia's total rural poor.

Infrastructure

The Second Village Infrastructure project will assist government poverty reduction efforts by funding infrastructure projects that will benefit targeted pockets of rural poor. The villagers will plan and build public infrastructure themselves, with help from grants and technical advice from engineering consultants.

Based upon community participation, these projects will offer temporary employment and increased income opportunities while improving overall living standards through building access roads, bridges, water supply schemes, sanitation and drainage facilities, markets, piers and other small economic infrastructure.

The total project cost is estimated at $159.6 million. The World Bank's loan of $140.1 million will finance 88 percent of the cost. The Indonesian government will be responsible for 10 percent of the village grants and for full administration costs. (hen)