Indonesia regrets WB involvement in noneconomic activities

JAKARTA (JP): Indonesia has expressed a strong concern over the increasing tendency of the World Bank to involve itself in non-socioeconomic matters of its member countries, Minister of Finance Prijadi Praptosuhardjo said on Tuesday.

Speaking at the Annual Meeting of the Governors of the International Monetary Fund and the World Bank in Prague on Tuesday, Prijadi urged the World Bank not to get involved in such issues and instead adhere strictly to its mandate.

"We believe that this is not a healthy development and can adversely affect its relationship with its clients and thus its effectiveness in poverty alleviation. We therefore urge the bank to strictly adhere to its mandate," he said.

Prijadi, however, did not describe the World Bank's moves that were unwelcomed by the Indonesian government.

The World Bank recently warned Indonesia that its failure to control the violence by pro-Jakarta militias in Atambua, East Nusa Tenggara Timor could risk the continuation of further financial aid.

The World Bank, as well as some countries and international bodies, made the remarks following the killing of three United Nations High Commissioner for Refugees' workers in Atambua by pro-Indonesia militias.

In his speech at the joint annual discussion, Prijadi also reported the progress Indonesia had made since the start of the Asian economic crisis.

He said the country, which was hardest hit by the crisis, was showing clear signs of recovery.

Macroeconomic stability has been restored and public confidence is on the rise, especially since the presidential election in October last year, he said.

He said Indonesia's Gross Domestic Product (GDP) showed a promising growth of 3.6 percent and 4.1 percent respectively in the first and second quarters of this year as compared to the previous quarters.

The minister said the inflation rate had been kept low at 4.7 percent from January to August.

Export from January to July rose by 33.7 percent compared to the same period last year, he said, adding that with such favorable trends, Indonesia expected to see the GDP grow by 4.9 percent or more this year, exceeding the original target of 3.8 percent.

Prijadi said the government was still working hard on its bank restructuring program.

"We're fully aware that one of the main cause of the financial crisis is the weakness in our banking system that has been exacerbated by the problems faced by the corporate sector," he said.

He said the government had a strong commitment to undertake all the necessary reforms to secure a speedy economic recovery.(cst)