WB, lenders may meet in February

WB, lenders may meet in February

Shanthy Nambiar, Bloomberg/Jakarta

Indonesia's main international lenders, a group that pledged US$2.8 billion in new loans last year, may meet in January or February 2005 to review Indonesia's economic progress before pledging more funding.

"We will need to discuss it with the new government" of President-elect Susilo Bambang Yudhoyono, World Bank country director Andrew Steer said on Tuesday.

He declined to elaborate.

The World Bank is part of a group of Indonesia's international lenders that pledged $2.8 billion in new loans this year to the government.

The nation of 235 million people needs to attract $150 billion in investments in the next decade for the economy to create enough jobs for its unemployed, the Asian Development Bank has said. The economy needs to expand an average 6.5 percent a year until 2014 to maintain social stability, the bank has said.

Susilo will be inaugurated on Wednesday, when he plans to name his cabinet, after defeating incumbent Megawati Soekarnoputri in the second round of presidential elections on Sept. 20. The government's failure to revive investment or create many new jobs undermined support for Megawati.

As many as 40 million Indonesians are unemployed and underemployed and economic slowed to 4.3 percent in the second quarter, the weakest among Asia's developing countries. The government estimates growth of 4.8 percent this year and 5.4 percent next year, still short of the 7.6 percent seen in 1996 before the Asian financial crisis.

The 30-member lender's group includes the Asian Development Bank, Japan and the U.S. The government in its 2005 budget estimates it will need Rp 26.6 trillion ($2.9 billion) in overseas loans.

The lenders pledged assistance last December after Indonesia exited a $5.3 billion International Monetary Fund loan program. Most of the funds are to finance the budget deficit and fund roads, hospitals and power plants.

The World Bank estimates growth of 4.5 percent this year for Indonesia and 5 percent next year. On Dec. 3, the World Bank said it was prepared to almost double annual lending to Indonesia to $850 million, and that more funds may be forthcoming if the country addresses concerns about corruption and the use of development assistance.

The bank will lend Indonesia between $450 million and $850 million a year to fund health programs and projects to alleviate poverty, and to build power plants and other infrastructure, it said in its country assistance report for July 2003 through June 2007.

The bank's loans to Indonesia averaged $450 million over each of the past three years.