U.S. gives $25 million loan to RI

JAKARTA (JP): The U.S. administration has agreed to provide a loan of US$25 million to support Indonesia's efforts to improve environmental infrastructure in rapidly-growing cities.

USAID's director for the Regional Housing and Urban Development Office for East Asia, William Frej, said in a statement made available yesterday that the loan agreement, signed last week, is part of a larger plan to provide $125 million for urban environmental infrastructure, which will be administered through the U.S. Agency for International Development (USAID) because it is also part of USAID's Housing Guaranty Program which guaranties loans from private U.S. lenders to the Indonesian government.

The lender of the $25 million loan is New York-based Lazard Freres and Co..

Since 1988 the Housing Guaranty Program has provided $145 million in guarantied loans, with another $100 million expected in coming years.

Frej said the new loan will be used to support programs to improve potable water systems, wastewater systems, storm drainage, solid waste collection and other infrastructure services in Indonesia's low-income urban areas.

The agreement is part of a larger effort called the Municipal Finance for Environmental Infrastructure Program, which seeks to improve urban environmental infrastructure on a sustainable and financially viable basis by enhancing the capacity of local administrations for urban management.

Funds from the loan will support Indonesia's efforts to improve the financial and planning capabilities of local governments and to facilitate greater coordination between the central government and local administrations.

The agreement also supports Indonesia's goal of mobilizing private sector and community participation in urban environmental projects.

"The fast pace of urbanization has made environmental infrastructure a priority for Indonesia's cities," said Frej.

He said that by the year 2000, Indonesia's urban population is estimated to exceed 90 million, roughly 45 percent of the country's population.

The negative environmental impact of such rapid urbanization is easily seen. Only 44 percent of Indonesia's city dwellers have access to piped water and groundwater levels around urban areas are sinking rapidly. Sewer systems reach less than five percent of urban households and 80 percent of infant deaths are still caused by water-related diseases, he said. (als)