Social safety-net program needs overseas support
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)