WB, IMF urged to focus on good governance

JAKARTA (JP): Minister of Finance Bambang Subianto urged the World Bank and the International Monetary Fund in Washington on Thursday to shift their work focus to developing "good governance" in government and social institutions in the wake of the latest economic developments.

Speaking on the second day of the seventh annual World Economic Development Congress in Washington, he said that it had become increasingly clear that an important aspect of development was what many often referred to as good governance.

"Good governance is often assumed to be synonymous with reductions in corruption. Reducing corruption is important but good governance means much more," he said.

He explained that good governance involved creating institutions to deal effectively with the myriad economic and social decisions required for the management of a modern economic state.

"If economic growth is to be sustainable and stable it is as important that we strengthen the social and economic institutions that make up our society as it is to raise the level of capital formation," he said.

He said that while the World Bank's role as the mobilizing agent for capital had been reduced, a more important function loomed, which was "to identify the needed changes in governance and how institutions can successfully manage the changes."

Bambang also said that international financial support should go beyond physical and tangible infrastructure projects.

"The development of well functioning nonphysical or intangible economic infrastructures at least should include a system to provide for disclosure of financial corporation, and a system to allow for the maintenance and improvement of a competitive environment and achievement of competitive price levels.

"We can easily observe that in many emerging economies such infrastructures have not been functioning or even do not exist. IMF and the Bank's focus on the development of intangible economic infrastructure is certainly necessary."

Bambang is scheduled to meet key officials of the World Bank, IMF, Asian Development Bank, and senior people from several foreign financial institutions.

He is then to attend the upcoming annual congress of the Institute of International Finance. (rei)