Indonesia gets World Bank loan to fight poverty

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)