WB denies tampering with RI poverty figures

WB denies tampering with RI poverty figures

NEW YORK (Dow Jones): World Bank officials Tuesday hit back at
charges they manipulated figures on the number of poor in
Indonesia to avoid embarrassing the Soeharto regime before its
fall last May.

The charges, previously reported in the Wall Street Journal,
have been voiced among others by Jeffrey Winters, a former
consultant to the U.S. Agency for International Development now
at Northwestern University.

But after keeping relatively quiet on the issue, Bank
officials now lambast the charge as a "ludicrous assertion."

"There was no deliberate manipulation to please a government,"
said Peter Stephens, spokesman for the Bank's East Asia and
Pacific regional office.

"The methodology used in Indonesia is entirely consistent, and
something that we stand by across the board. We're not in the
business of fiddling numbers. We're in the business of reducing
poverty," he told Dow Jones Newswires.

At the heart of the debate are charges by Winters that during
the preparation of its 1990 "Focus on Poverty," the Bank buckled
under pressure from the Indonesian government to alter its
estimate of the number of people living in poverty.

Then President Soeharto, the self-proclaimed "Father of
Development," had personally declared a record low of 30 million
people living in poverty - proportionately less, at the time,
than in the U.S. Critics charge that the Bank agreed to use
Soeharto's figure for fear of embarrassing his regime.

World bank figures are generally considered to be independent
and are used by a wide range of third parties, including ratings
agencies such as Moody's and Standard & Poor's. But the issue is
at the center of wider allegations that the Bank routinely gave a
false impression of events in Indonesia in order to defend its
status as the jewel in the World Bank's development crown.

On Tuesday, Northwestern's Winters stood by his assertions,
saying that while he worked in Indonesia, the fudging of numbers
by the World Bank was something that people just "rolled their
eyes at."

Winters has long maintained that the World Bank turned a blind
eye to diversions by Indonesian officials of around 30 percent of
loans, charges which the Bank's vice president for Asia and the
Pacific, Jean Michel Severino, dismissed in July 1997 as
"demonstrably untrue."

One month after Severino's remarks, a report commissioned by
the Bank's resident staff in Jakarta concluded that "at least 20
percent to 30 percent of GOI (Government of Indonesia)
development budget funds are diverted through informal payments
to GOI staff and politicians." The report was leaked to the Wall
Street Journal a year later, in August 1998.

The Journal first reported in July 1998 allegations that the
World Bank had altered its poverty figures.

Winters said that he expected the controversy over the Bank's
poverty figures to follow the same pattern as the dispute over
the diversion of bank funds.

"I've been through this before, where I or others say
something, the Bank issues fervent denials, and then it takes
time for the documents to be leaked from inside or other things
to happen before we have the documentation we need," Winters
said.

In this case, however, Bank officials were standing firmly
behind their work.

Kyle Peters, who authored the disputed 1990 report, confirmed
Tuesday that routine discussions were held with the Indonesian
government prior to the publication of the report, and that the
methods used to calculate the poverty levels were discussed.

But he emphasized that the World Bank poverty figure was not
changed as a result of those discussions. The only change between
the draft and final reports, he said, was that the Bank's
estimates were placed sequentially after the government's, and
not before.

"There was a change in the presentation, but there was not -
and this is very important - any change in any of the
calculations or any of the numbers," Peters said.

However, though the World Bank presented its own figure of 38
million in its internal report on Indonesia that year, it used
only the official government figure in its public World
Development Report to show a staggering 34 percent drop in the
number of people in poverty over the previous three years.

Once considered the World Bank's biggest success story,
poverty in Indonesia was reported to have fallen 46 percent
between 1980 and 1987 under Bank figures - a larger fall even
than was claimed by the Soeharto government.

Since Indonesia's economic crash earlier this year, up to half
of the nation's 200 million population has been plunged back into
poverty. While the crisis has caused genuine suffering, the huge
increase in the number of reported poor reflects in part a return
to statistical reality, Winters said.

"Just before the crash, the World Bank said Indonesia had
roughly 11 percent of its people living in poverty. That was less
than in the U.S.," he said. "Something was very wrong."

Bank officials concede that they may have been swept up in the
enthusiasm over Indonesia. But they strenuously deny they ever
went as far as to doctor development figures.

Soedradjad Djiwandono, the former governor of Indonesia's
central bank, seemed to agree with that assessment.

He said the World Bank did often go along with government
pressure to soften negative statements about the country in
reports. But he said he was never aware that any figures had been
altered as a result.

"This toning-down was always on how you put things in words,
not in figures," he said.