WB links loans to reform programs

JAKARTA (JP): The World Bank warned the government on Wednesday that it must be able to provide concrete results of its economic reform programs and its efforts to curb corruption in order to continue receiving financial support from international donors.

Visiting World Bank vice president for East Asia and the Pacific Jemal ud-din Kassum said the upcoming October meeting of the Consultative Group on Indonesia (CGI) would closely assess the progress of the country's reform programs, including economic programs, poverty alleviation, creating good corporate governance and fighting corruption.

"I recognize this is an ambitious agenda that will take time to implement. But at the same time it is important to show results," he told a news conference at the end of his two-day visit.

He said there was progress in the country's reform programs, but stressed that more things were needed to be done and they must be sustained.

"If the momentum stalls or progress slows down, it is understandable that some donors will raise concern," Kassum said.

The CGI groups Indonesia's major international lenders chaired by the World Bank. The grouping will convene in Tokyo on October 17 and October 18.

Kassum, who arrived late on Monday, met with several key economic ministers and donor representatives to make preparations for the October gathering.

In February, the CGI pledged some US$4.7 billion in loans to support the current state budget.

Kassum said he was impressed by the economic achievements made by the administration of President Abdurrahman Wahid in just eight months time.

He pointed out that Gross Domestic Product (GDP) growth in the first quarter of this year was 3.2 percent, there was a strong export performance and rising foreign exchange reserves.

He also said other successes included the recent disbursement of the International Monetary Fund (IMF) loan, and sovereign debt rescheduling deals reached with the Paris Club and London Club.

"So progress is being made. The real issue is how to maintain the progress ... so that funds continue to flow," Kassum said.

Asked whether the Bank had demanded the government to immediately resolve certain corruption cases, Kassum said the Bank did not deal with individual cases.

"Our task is to build institutions that ensure due process is put in place which can address these (corruption) issues," he said.

The government has been criticized for dragging its feet in resolving several high-profile cases of alleged corruption, including the Soeharto and Bank Bali cases.

Former president Soeharto has been alleged of amassing billions of dollars in wealth through corruption during his 32 years in office.

The Bank Bali case erupted in the middle of last year, and allegedly involves several important figures of the previous administration of B.J. Habibie.

Kassum also said the government must press ahead with its key economic reforms program, particularly the corporate restructuring and bank recapitalization program.

He said the framework for corporate restructuring had been established, and the government must be able to show more success with some of the restructuring stories.

"It's important to demonstrate actual cases to the market ... the momentum must be maintained," he said.

He added that the government must also complete the remaining bank recapitalization program.

"We also emphasize the management of the banks must be strengthened so that they can play a role in the recovery of the economy," he said. (rei)