Social safety-net program needs overseas support

JAKARTA (JP): Newly appointed chairman of the National Development Planning Board Boediono said yesterday that Indonesia would need more foreign aid to strengthen its social safety-net program.

"The budgetary allocation for the safety-net program will have to be revised due to the latest developments," Boediono told reporters yesterday following a ceremony to mark the hand over of the board's leadership from his predecessor Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita.

Boediono, a former Bank Indonesia director, said the revisions would have to be made because the recent political tension had further worsened economic hardships faced by low-income groups.

"My top priority now is to strengthen the safety-net program," he said.

Due to limited domestic resources, most of the funding would have to come from overseas, including from the World Bank, ADB, and bilateral donors, he said.

Indonesia's already devastated economy has been further battered by social unrest and political friction which led to the resignation of President Soeharto last week.

Soeharto was replaced at the helm of the nation by his protege B.J. Habibie last week. Habibie announced his new cabinet almost immediately after taking power.

Opposition leaders have given the new government six months to prove that it is capable of lifting the country out of its current plight.

Ginandjar, who retained his post as Coordinating Minister for Economy, Finance and Industry in the new cabinet said that although the country would continue to implement the economic reform program agreed with the IMF during the last months of Soeharto's regime, it was essential to provide more support to the social safety-net program.

Indonesia currently has provisions to support vulnerable groups in society through subsidies on basic needs and labor intensive job creation programs.

A total of Rp 1.8 trillion has been allocated for job creation programs under the 1998/1999 state budget.

A further Rp 5.3 trillion has been set aside to subsidize staple goods, including Rp 2.8 trillion to ensure that imported rice is available at an exchange rate of Rp 6,000 to the U.S. dollar, half last week's market exchange rate.

The forecast 3.2 percent budget deficit was to be covered by proceeds from the privatization of 12 state-owned enterprises and overseas aid. The privatization program was expected to raise a total of Rp 15 trillion.

In February, the World Bank and the ADB pledged to provide US$1 billion and $300 million respectively to help fund the country's social safety-net program.

Other developed nations also agreed to provide aid, including Australia, which promised to give A$50 million (US$31 million).

Reuters reported that Australian foreign minister Alexander Downer had said that humanitarian aid to Indonesia could be increased, if the situation required. (rei)