RI gets $200m for policy reform program
The Jakarta Post, Jakarta
The Asian Development Bank (ADB) has provided another US$200 million in loans for Indonesia to help achieve its millennium development goals of sustainable economic growth and poverty alleviation through better macroeconomic policies.
The loans will be used to finance a Development Policy Support Program, the bank said in a statement on Friday.
The program includes a series of structural reform packages focusing on establishing a sound public financial management system and an effective utilization of fiscal resources, improving investment rules, strengthening the financial sector, and reorienting public spending to reduce poverty and unemployment.
It will support the government's Medium-Term Development Plan for 2004-2009, which seeks to stimulate higher and more sustainable economic growth of 7 percent a year by 2009. The plan also aims to halve poverty to 8.2 percent by that date, from 16.6 percent in 2004.
"The program is a key pillar of ADB's emerging country strategy and program for Indonesia for 2006-2010," Shamshad Akhtar, the director general for the bank's Southeast Asia Department, said.
Shamshad hoped the program would increase government reform and strengthen public service delivery to the poor.
Bank chief economist for Indonesia Ramesh Subramani said the program would help the government continue a process of consolidation.
"Moving forward, the government (of Indonesia) is fully committed to further strengthening fiscal management, with the focus on tax reforms, debt sustainability and reorienting public expenditures toward reducing regional disparities and achieving the (United Nations) Millennium Development Goals," he said.
The loan will be delivered in a single tranche from ADB's ordinary capital resources. It has a 15-year term, including a grace period of three years, with interest determined under ADB's LIBOR-based lending facility. The executing agency is the Ministry of Finance.
The government needs an estimated $3.6 billion in total external financing for the 2005 budget, which consists of $1.25 billion in program loans to support its reform policies, and $2.35 billion in project disbursements.
In addition to the bank's loan, the Government has requested $400 million from the World Bank and parallel financing from Japan, with the amount yet to be determined.