President expresses relief over CGI aid

President expresses relief over CGI aid

JAKARTA (JP): President Soeharto expressed relief yesterday
that the World Bank-chaired group of creditors remains confident
in Indonesia as reflected in its new aid commitment of US$5.36
billion.

Minister/State Secretary Moerdiono disclosed the President's
feelings after he and Minister of Finance Mar'ie Muhammad briefed
Soeharto in Surabaya yesterday on the outcome of the meeting of
the Consultative Group on Indonesia (CGI) which ended in Paris on
Wednesday.

CGI was set up in 1992 after the Inter-Governmental Group on
Indonesia, a donor group coordinated by the Dutch government, was
dissolved due to Indonesia's disillusionment at what it saw as
the Netherlands' persistent intervention in Indonesia's domestic
affairs.

Mar'ie told newsmen that the total amount of new aid pledged
by CGI fully met Indonesia's requests.

Soeharto was in Surabaya yesterday to launch a passenger liner
built by the state-owned PT PAL shipyard near the Tanjung Perak
port.

"We don't need too large an amount of foreign aid because
overseas loans are merely a supplement to the state budget,"
Mar'ie noted.

Mar'ie pointed out that the new commitment reflects the
creditors' trust in Indonesia.

But the composition of the individual commitments, as
explained by Coordinating Minister for Economic and Financial
Affairs Saleh Afiff in Paris, shows that had Japan not increased
its aid by US$470 million, the total commitment might have been
much less than the $5.2 billion pledged by CGI last year.

Largest

Japan, the largest single creditor, pledged 187.6 billion yen
($2.14 billion at the rate of 87.5 yen per dollar), compared to
176.5 billion yen ($1.67 billion, converted at the prevailing
rate in July, 1994) last year.

The second largest creditor, the World Bank, cut its
commitment to $1.2 billion from $1.5 billion last year.

Except for the Asian Development Bank, which raised its pledge
to $1.2 billion from $1.1 billion, most other government and
development agency creditors decreased their commitments for the
1995-1996 fiscal year.

Afiff told a news conference at the end of the CGI meeting in
Paris on Wednesday afternoon that the foreign aid would be used
largely for the development of human resources (notably
education), infrastructure for transportation, communication,
electricity transmission and for environmental protection.

Mar'ie explained in Surabaya yesterday that the projects to be
funded by the foreign aid were selected by the Indonesian
government itself.

"We ourselves decided on the projects to be financed by the
creditors," he added.

Indonesia proposes a number of development projects, listed in
what the government calls the Blue Book, to the CGI members a few
weeks before the opening of the CGI's annual meeting. It is up to
the individual creditors to decide on which of the projects they
want to fund. (vin)