U.S. gives $25 million loan to RI

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)