WB approves the release of US$400m loan to Indonesia

JAKARTA (JP): The World Bank approved the release of a US$400 million loan to Indonesia on Tuesday, completing the disbursement of the $1 billion loan package signed in July last year.

The World Bank said the loan approval reflected the continued progress of reforms in Indonesia's structural and financial sectors.

The World Bank is satisfied with recent policy developments in Indonesia, citing the recently announced changes in regulations governing forestry management and palm oil export taxes as examples.

"Despite enormously difficult circumstances, the government is making progress in its reform efforts," the World Bank's country director for Indonesia, Dennis de Tray, said in a statement.

He also noted that portfolio reviews for all banks under the supervision of the Indonesian Bank Restructuring Agency had been completed, and that the government was moving to accelerate the restructuring of banks in order to reestablish effective banking services.

"A framework for debt and corporate restructuring has been established and many firms have begun to seek restructuring assistance under the Jakarta Initiative," De Tray added.

However, De Tray reminded Indonesia that it still faced many challenges in its efforts to restore its economy.

"The World Bank remains committed to helping Indonesia on this journey in any and every way we can," De Tray said.

The $1 billion loan package was signed on July 2, 1998, under the name of the Policy Reform Support Loan.

The loan is intended to provide the Indonesian government budgetary support for reforms in the structural and financial sectors, and to meet urgent social needs.

The initial $600 million was disbursed immediately after the loan was signed last year. (02)