JP/14/WB

JP/14/WB

RI to receive $250m loan from World Bank

Bloomberg
Jakarta

The World Bank said it approved a $250 million loan to
Indonesia to fund health programs, alleviate poverty and build
roads and other infrastructure projects.

The aid will help to support an estimated 20,000 villages
stretching from Sumatra in the west to Papua in the east from
2003 until 2008, project director Scott Guggenheim said in
Jakarta. It is part of the estimated $850 million the bank agreed
to lend Indonesia for the 10-year project that started 1998.

"The government doesn't have the money," Guggenheim said.
"And, there are a lot of poor villages that need the services."

Indonesia is counting on overseas loans and investment to help
expand its economy by at least 4 percent this year and create new
jobs. The cash-strapped government can't stimulate the economy
with state spending in the face of a budget deficit estimated at
Rp 34.4 trillion (US$4.2 billion).

The World Bank estimates growth will slow to 3.3 percent this
year from 3.7 percent last year. Indonesia has about 40 million
unemployed people, with 2.5 million entering the workforce
yearly.

In January, international lenders extended $2.7 billion to the
government and another $400 million for provincial governments
and non-governmental aid organizations. The Asian Development
Bank and the World Bank said then that new loans would depend on
Indonesia's ability to curb corruption and help boost investor
confidence by giving them avenues for legal recourse.

In June 2002, the World Bank canceled loan disbursements from
an $88 million development project in cities across Sulawesi
island due to concerns of misuse of aid. It had disbursed $76
million.

Earlier this month, the World Bank said it is willing to lend
as much as $1 billion a year from an earlier pledge of $850
million, to bolster Indonesia's economy. The increase is pending
Indonesia's efforts to better monitor the use of development
loans, the bank said.

The World Bank lent Indonesia $419 million last year and has
disbursed $84.5 million this year.