U.S., World Bank hail Indonesia-IMF accord
JAKARTA (JP): The World Bank and the United States have welcomed a new agreement between Indonesia and the International Monetary Fund on a revised economic program designed to stabilize the country's embattled economy.
U.S. Deputy Treasury Secretary Lawrence Summers said in a statement released from Washington, a copy of which was made available here yesterday, that his country had a strong economic and national security interest in seeing Indonesia succeed in sustaining economic and political reforms.
"We will be consulting with the international financial institutions and other countries around the world to ensure that international support for Indonesia is sufficient for it to meet the difficult challenges it currently faces," Summers said.
The agreement signed here Thursday is a prerequisite for the next US$1 billion loan from the IMF to the country.
The IMF has arranged a $43 billion bailout package to assist Indonesia's economy. The IMF has disbursed $4 billion of its $10 billion commitment.
"We look forward to the timely (IMF) board approval and disbursement of these funds, as well as those from the World Bank," Summers said.
The World Bank also welcomed the new IMF deal with Indonesia, saying it was ready to submit a new $1 billion policy reform support loan to its executive board on July 2.
The bank's vice president for East Asia and the Pacific, Jean- Michel Severino, said in a statement: "We strongly support this latest agreement with the IMF as a crucial step in resuming aid to a country suffering the worst economic crisis in its history.
"It is important for all of us in the development community to work together with Indonesia to take the steps necessary to help get the economy back on the path to recovery while protecting the poor and those most hurt by the financial crisis."
He noted that his team in Washington had been working to provide assistance to the nation in its time of need.
The bank has in recent days released a sobering assessment of the social impacts of the crisis on the Indonesian people and has announced a number of initiatives to help cushion the impacts.
Measures include providing education scholarships and grants, and emergency health funding programs and labor development through various social safety net schemes.
"In addition to the number of recent poverty alleviation projects presented to our board, we are also preparing to submit a $1 billion policy reform support loan to the executive board on July 2," Severino said.
The policy reform support loan would help Indonesia reform its financial and banking sector and also improve corporate governance.
The World Bank has pledged a total of $4.5 billion to Indonesia under the IMF-sponsored three-year program, of which $2 billion is earmarked to fund economic reforms -- including humanitarian needs -- and the remainder to finance project loans.
Meanwhile, the Asian Development Bank (ADB) signed a $1.5 billion loan agreement with Indonesia yesterday.
The loan is part of the $43 billion IMF-sponsored bailout package, under which ADB has pledged to give the country $3.5 billion in financial assistance over three years. (rid)