WB loan delay hints at rising distrust of government
WB loan delay hints at rising distrust of government
JAKARTA (JP): The World Bank's delaying of US$1.1 billion in
loan disbursement for Indonesia indicates increasing
international concern over aid abuse by government officials,
analysts have said.
A senior economist at the LPEM economic and social research
center of the University of Indonesia, Rasaka Mahi, said on
Saturday that the World Bank was particularly concerned over
widespread criticisms of mishandling of the multibillion dollar
social safety net program.
"Many non-governmental organizations have called on the World
Bank to delay the release of the loans amid fears of abuse by
government officials," he told The Jakarta Post.
He explained that the international-sponsored social safety
net aid, aimed at helping the poor survive the current economic
storm, had not all reached the intended recipients and some funds
had been misappropriated by officials.
"In addition, there's the political risk," he said, pointing
out there was no guarantee that government officials would be
impartial when providing the financial aid to the poor ahead of
the country's landmark June 7 general election.
Government officials have in the past been stalwart supporters
of the ruling Golkar Party.
The World Bank approved on Thursday two loans worth $1.1
billion for Indonesia, including $600 million to help strengthen
the social safety net program and $500 million to support
economic reforms.
The money was the second set of World Bank credits for
Indonesia in less than a week, after $400 million in loans were
approved for poverty alleviation and water resource management.
The country, however, won't have access to the loans until
after the June general election.
The World Bank said in a statement that it gave approval on
the loans after Jakarta agreed not to touch the funds until after
the election.
Tony Prasetiantono, an economist at Gadjah Mada University,
said the World Bank had to delay the disbursement because it
wanted to show the Indonesian people that it was not supporting
any political party -- namely Golkar -- in the elections.
"I think the WB wants to play it safe," he said.
Golkar, which easily won every general election during the 32-
year rule of authoritarian former president Soeharto, is now
facing serious challenges from opposition parties.
Tony added that the one-month delay to the Bank's loans would
not have a serious effect on the government's budget in the
1999/2000 fiscal year.
"The government can secure other sources of funding," he said.
The press earlier reported that the World Bank made the delay
following pressure from the U.S. government.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita denied this on Friday, saying the Bank
delayed the funds because Indonesia could not meet certain loan
conditions before the election.
Ginandjar seemed to play down the delay, saying the country
does not need the loans at the moment anyway.
But the University of Indonesia's Rasaka urged the government
to be serious in taking the necessary measures to prevent further
abuse of the social safety net aid.
"I think the public has to have a bigger role in monitoring
the program," he said.
He admitted that launching a social safety net program was no
easy job, and that other countries had also experienced serious
problems in similar programs.
The government plans to allocate Rp 6 trillion for the social
safety net program in the current 1999/2000 fiscal year.
Chairman of the National Development Planning Board (Bappenas)
Boediono recently admitted abuse of the social safety net funds
for political ends.
The press has also reported that some Rp 8 trillion of the Rp
17.9 trillion social safety net aid for the 1998/1999 fiscal year
failed to reach its intended targets.
The government and the World Bank are currently working to
improve the social safety net program, including developing a
better monitoring system and simpler and transparent procedures.
(rei)