WB approves $400m loans to Indonesia

WB approves $400m loans to Indonesia

JAKARTA (JP): The World Bank announced in Washington on
Tuesday its approval of US$400 million in new loans to Indonesia
for the country's poverty alleviation and water resource
improvement programs.

World Bank's country director Mark Baird said the loans were
an important part of the bank's program of support to Indonesia.

"The Urban Poverty Project (UPP) is so important because it is
all about building communities and empowering people," said Baird
in the bank's latest statement.

Of the $400 million, approximately $100 million was allocated
to UPP, which targets people who were poor before the financial
downturn began and suffered more due to high inflation or loss of
income.

The bank said UPP encourages urban communities to develop
investment priorities to generate employment and income and build
public infrastructure through labor intensive methods.

Funds for small public infrastructure works will be
distributed through grants, while funds for economic activities
will have to be repaid within a year at a commercial rate and
repay schedule reflected by the cash flow of the financed
activity.

The remaining $300 million was given as a Water Resources
Sector Adjustment Loan (WATSAL), an integrated program of policy,
institutional, management and regulatory reforms in the water
resource sector.

The bank said that the proposed reforms represent a new way of
doing business in the water sector of Indonesia.

In conjunction with the reforms, Indonesia will also adopt a
National Water Resources Policy, which will be implemented and
coordinated by a new institution, an interministerial National
Water Council, the bank said.

The World Bank's approval of the $400 million loan comes
almost at the same time Indonesia starts its 16-day election
campaign period. This has sparked criticisms from government
opponents in Indonesia and development activists in Washington as
well as the U.S. government.

American economist Jeffrey Winters was quoted by Antara on
Tuesday expressing his concern that the loans might only be
utilized by the ruling party Golkar during the campaign and
general election scheduled for June 7.

"It (the approval of the loans) will be just the same as
though (the World bank) gives campaign funds to Golkar Party," he
said, adding that Golkar might use the money to support its
attempts to maintain the status quo.

The World Bank's board will consider on Thursday two
additional adjustment loans, the $600 million social safety net
adjustment loan and the $500 million policy reform support loan
II.

The loans are part of a broad program of external assistance
provided by the International Monetary Fund, the World Bank, the
Asian Development Bank and bilateral donors to Indonesia. (cst)