UNDP signs accord with government to help reduce poverty

JAKARTA (JP): The United Nations Development Program (UNDP) signed on Thursday a US$300,000 technical assistance agreement with the government to support the preparatory works to establish an agency for poverty reduction in Indonesia.

The agreement was signed by UNDP resident representative Ravi Rajan and Coordinating Minister for the Economy Rizal Ramli. Visiting UNDP Administrator Mark Malloch Brown witnessed the signing ceremony.

"This is only to get the program started, and I believe it's approximately $300,000 for now. And when the larger program is developed additional resources will probably be needed," Rajan told reporters following the signing ceremony.

He said that the size of the next loan could not yet be estimated because it would "depend on the needs."

Rizal said that the new poverty reduction agency would be led by prominent agricultural economist H.S. Dillon.

He said that the agency would be charged with developing operational strategies for poverty reduction in the country which has a population of over 200 million people.

He explained that the agency would support the inter- ministerial committee chaired by Vice President Megawati Sukarnoputri. The committee will oversee and coordinate strategic decision-making on poverty reduction initiatives. The establishment of the inter-ministerial committee was a sign of the government's political commitment to reduce poverty.

Rizal said that poverty reduction was the government's single top priority. "Approximately one-fifth of the population is now classified as extremely poor and another fifth is vulnerable to falling back into poverty. This is an unacceptable situation," he said.

He explained that the country's economic crisis that started in the middle of 1997 had dramatically increased the poverty level to 25 percent of the population by the end of 1998 from just over 11 percent in 1996.

He said that the government macroeconomic and structural reform programs plus social safety net measures to help protect the poor from the economic crisis had been able to reduce the poverty level to 23 percent of the population by August 1999.

"But we cannot be complacent... much more needs to be done," he said.

He said that although the economy had continued to recover from its crisis with GDP growth at 4.8 percent last year and a moderate inflation level compared with an economic contraction of minus 14 percent and a high inflation of more than 70 percent in 1998, the economy must register an economic growth of more than 6 percent to be able to absorb unemployment.

Rizal said that the government poverty reduction strategy focused on three elements including promoting economic opportunities for the poor, empowering the poor, and fostering security for the poor.

"To support this strategy, we shall continue to maintain sound macroeconomic policies to ensure that inflation is held in check and that our farm and industrial sectors remain competitive," he said.

"We will also continue to work to ensure that Indonesia offers an investment environment that is attractive and predictable," he added.

Rizal said that the target of the government was to reduce by half the number of Indonesians who live in extreme poverty by 2015.

Meanwhile, UNDP's Brown said in his remarks that poverty reduction was crucial for political stability in Indonesia.

"At a moment like this in Indonesia with so many challenges, perhaps it's easy to forget that the greatest threat to political stability in the long term in Indonesia is poverty," Brown said.

"The short run political difficulties that the country faces often can cause the government to take their eye off that long- term goal," he added.

Brown said that fighting poverty and a successful democracy were inter-related. He stressed that the UNDP would support the government's efforts to fight poverty, implement decentralization, and strengthen democratic institutions.

Brown's visit to Indonesia is for three days starting Thursday. His visit includes meeting with President Abdurrahman Wahid, Megawati, House of Representatives Speaker Akbar Tandjung, senior ministers, and several non-governmental organizations.(rei)