WB mulls high-case loan scheme for Indonesia
Dadan Wijaksana, The Jakarta Post, Jakarta
The World Bank, one of the country's main creditors, could raise its loan commitment to Indonesia in the near future in view of the continued progress Indonesia is making in its economic reform agenda.
The Bank's Country Director Andrew Steer said on Monday that Indonesia's reform programs were moving on the right track, which could in turn make Indonesia eligible for the Bank's high-case lending scenario.
"Indonesia is moving toward that direction, although this doesn't mean that Indonesia needs that amount, but that we are willing to endorse it," Steer told reporters, adding that the program should be available in the next several months should Indonesia maintain the reform pace.
The World Bank has been providing loans for years to Indonesia, using its Country Assistance Strategy as among the guidelines in determining the amount of the annual loans.
Under the existing scheme, Indonesia has been receiving loans of between US$450 million and $800 million per year, which are used to help finance various development projects across the country.
But, the commitments could be boosted to over $1 billion under the high-case scenario.
The "upgrade" in Indonesia's status could be seen as a recognition from the Bank, as a foreign donor, that progress could indeed be seen.
Steer said that Indonesia's efforts in its reform agenda had given the World Bank, as well as other creditors, confidence in the country's overall economic outlook.
The government has done a good job in creating and retaining the country's macroeconomic stability in the past years, but progress -- which was deemed encouraging -- has also been made such as in trying to create a healthy and corruption-free procurement system, Steer added.
Steer pointed out the issuance of a ruling on procurement in the public sector as an important step toward creating a fairer and more transparent public procurement system.
He was referring to a presidential decree issued last year, which tightens procedures for public procurement, aimed at curbing flourishing corruption as it promotes transparency and efficiency in the procurement of goods and services
International institutions -- including the World Bank, and the Asian Development Bank -- have often stated that corruption is mostly evident during the procurement of goods and services for state institutions.
A report last year indicated that leakage in the procurement process could account for up to 50 percent of any project's value.
Yet, despite the progress, Steer said, there was still room for improvement which could accelerate Indonesia's inclusion in the high-case lending program.
On the procurement issue, was the establishment of a national procurement office to coordinate the affairs, and further avoid abuse of public funds.
The World Bank is among Indonesia's largest creditors under the Consultative Group on Indonesia (CGI), which groups together Indonesia's major creditors and convenes each year to determine financial pledges to the country. The ADB and Japanese government are also included in that group.
Last year, the CGI pledged to provide loans amounting to $2.8 billion. CGI plans to convene in Jakarta in January to decide on a new loan commitment for next year.