WB, IMF warn Indonesia of possible aid suspension
JAKARTA (JP): The World Bank and the International Monetary Fund (IMF) warned the Indonesian government on Wednesday that failure to restore stability in riot-torn East Timor may lead to a suspension of financial aid to Indonesia.
In its first official statement since East Timor voted in favor of independence last week, the World Bank indirectly linked the realization of a US$6.9 billion aid package pledged by the Consultative Group for Indonesia in July to a peaceful resolution in the troubled territory.
The World Bank chairs the CGI, which groups Indonesia's major donors.
"At the CGI meeting in July, the Indonesian government told donors 'rest assured that... we are determined to implement our part of the agreement and give our full support to the operations of the United Nations in East Timor,'" the World Bank said.
Following through on the statement made at CGI is a critical component of the policy commitment of the government of Indonesia, setting the context in which the program of international assistance agreed in July is to be realized, the World Bank said.
The World Bank urged the Indonesian government to act decisively to enable order to be restored to East Timor and to continue implementing the next steps of the transition process in accordance with the existing agreement.
"The East Timorese -- all of those who voted -- took a brave step in going to the polls and they deserve to see the results of the ballot implemented in full, without violence and in an orderly fashion," the bank said.
The bank also promised to help the people of East Timor in the reconstruction of the territory.
"We have already announced plans to help build the capacity of East Timorese groups to lead reconstruction planning efforts, and to work with our international partners in evaluating priority needs and mobilizing funds for reconstruction."
The World Bank's comments follow similar words of warning from the IMF, which said Indonesia had "every interest" in ensuring the process in East Timor unfolds smoothly and without violence.
The IMF said it would decide soon whether to go ahead with a planned mid-September visit to Indonesia, but it is worried about the economic program, the Bank Bali case and the situation in East Timor.
"The IMF is reviewing the situation in Indonesia and will shortly make a decision on whether to send a mission to Jakarta which was previously scheduled for mid-September," IMF External Affairs Director Thomas Dawson said in a statement.
Dawson said the IMF discussed its concerns over economic uncertainties during a visit to Washington last week by Indonesia's Coordinating Minister for Economy and Finance Ginandjar Kartasasmita.
The IMF continues to view with grave concern the deteriorating situation in East Timor, Dawson said, adding that Indonesia should have every interest in seeing the process there unfold smoothly and without further violence in accordance with internationally recognized norms.
The IMF has arranged US$43 billion in an international bailout fund to help Indonesia cope with the crisis. The fund pledged some $11 billion in the aid package, of which some $2.3 billion has yet to be approved.
If the review is delayed, this would automatically delay the disbursement of the next installment of the aid package from the fund, which is scheduled to release about $460 million for Indonesia around the end of the month.
The people of East Timor voted last week in favor of independence from Indonesia, but the situation there has descended into chaos and violence. Indonesia imposed martial law and a shoot-on-sight curfew in the territory on Tuesday. (hen)