WB chief sees no major problems in RI

By Vincent Lingga

HONG KONG (JP): World Bank President James Wolfensohn said yesterday the bank did not have any major problems with its development projects in Indonesia regarding the issue of corruption.

"Yes, there has been a lot of publicity overseas on Indonesia regarding that issue," Wolfensohn said in response to a question on Indonesia's ranking by various international institutions as one of the most corrupt countries in the world.

He said the bank had been working closely with the Indonesian government to improve the transparency of policy making and regulations.

"We have been working with Muhammad (Minister of Finance Mar'ie Muhammad) to examine our projects in Indonesia and we don't see any major problems," Wolfenshon told journalists at the end of the three-day IMF-World Bank meeting here.

"A lot of questions have been raised outside regarding Indonesia but the bank's examinations did not find problems that should have raised its concern," he said adding Indonesia is one of the biggest borrowers from the World Bank.

Wolfensohn, however, was specifically referring to World Bank projects and not to corruption in general in Indonesia.

He added the 181 shareholder members of the two Bretton Woods institutions fully supported the concerted campaign against corruption being launched by the IMF and the World Bank.

Wolfensohn acknowledged that corruption has social, political, cultural and economic dimensions.

"But our clear-cut mandate is to focus on the economic issues of corruption though we realize it is part of the same mix," he added.

"You will see that we will be outspoken on this issue in our dialogs with members," he told another reporter who still doubted the bank's courage and clout vis-a-vis its member governments.

But Wolfensohn also admitted that combating corruption is a long process.

He quoted a minister from Latin America as jokingly saying that corruption is like inflation. "It will always be with us but we should check it at a single-digit level."

The meeting, he added, had been remarkably successful because the ministers frankly and openly discussed such issues as corruption which until one year ago was very sensitive.

"We have found that international pressures could help the people inside a country fight corruption. Finally, it is the people inside who should move to make the change and combat corruption," Wolfensohn said.

He said the press might be more excited about the debate between American financier George Soros and Malaysian Prime Minister Mahathir Mohamad on the currency crisis in Southeast Asia.

Mahathir, who accused Soros of partly being responsible for instigating the currency crisis in the region, renewed his attacks on currency speculators at a lengthy speech at a seminar on the eve of the meeting over the weekend.

Soros defended his position and explained his view on market globalization in a speech at the same forum one day later and lambasted Mahathir for his irrational views on market mechanism.

The World Bank chief said ministers frankly talked about problems during the meeting, learning from mistakes and exchanging views on ways of improving the situation.

Wolfensohn noted with great satisfaction the unanimous and strong agreement at the meeting that every country should further strengthen its financial system.

"Every country now fully realizes that if the financial system goes, everything else goes as well," Wolfensohn said, reemphasizing the crucial importance of a sound financial sector in maintaining macroeconomic stability.

Poverty

Reflecting on the currency turmoil in Southeast Asia, the World Bank vice president for East Asia and the Pacific Jean- Michel Severino criticized the media for placing too much attention on the crisis itself.

"What is more important is the critical issues of poverty reduction and structural policies because in such a crisis it is the poor who will suffer the most," Severino said.

He said the key question is whether the main burden of the currency crisis would fall on the taxpayers or company shareholders and lenders who had taken the risk and profited from it in the past.

"The way we handle this crisis will impact very much on how the poor will suffer," Severino said.

Asian fund -- Page 10

Financial sector -- Page 12