President pledges to use loans for productive plans
JAKARTA (JP): President Soeharto promised here on Saturday that the forthcoming aid from the Consultative Group on Indonesia (CGI) will be used strictly for financing productive development projects.
"The fresh CGI aid will not be used for consumptive activities but rather for productive ones," the President was quoted by finance minister Mar'ie Muhammad as saying on Saturday.
Speaking to reporters after meeting with the President to report on the outcome of the CGI meeting in Paris late last week, the minister said that loan commitments from the World Bank and the Asian Development Bank declined slightly.
The minister said that the drop in loan commitments is not an indication that the confidence of the two banks in the Indonesian economy has declined.
The CGI, which groups 19 donor countries and 13 international financial agencies, agreed on Friday to provide US$5.20 billion in fresh aid to Indonesia for the current 1994-95 fiscal year, a slight increase from $5.11 billion the previous fiscal year.
The aid committed by the World Bank dropped to $1.50 billion from $1.60 billion, while that of the Asian Development Bank fell to $1.1 billion from $1.2 billion.
Appreciation
The minister, who was accompanied by Rahardi Ramlan, the vice chairman of the National Development Planning Agency (Bappenas), said that the World Bank-chaired donor organization appreciated the government's consistent efforts to improve the economy through a number of deregulation measures.
"The CGI members understand that Indonesia still needs time to settle problems such as its non-performing loans," the minister said, adding that debt problems are common in other countries.
Mar'ie explained that Japan is the largest donor at present with aid commitments totaling around $1.67 billion, comprising $1.3 billion for project aid, 200 million for fast-disbursement aid and the remaining $170 million in the form of grants.
Around $200 million of the $1.3 billion earmarked for project aid will be used to support the government's program to improve least developed villages beginning next fiscal year, Mar'ie said.
Meanwhile, Attorney General Singgih said that his office will further tighten control over the use of foreign aid even though no deviations have been found thus far.
"No finding has so far been made about the deviation of the foreign aid utilization," he told reporters who asked him about what became of previous foreign aid funds. (hen)