WB mulls high-case loan scheme for Indonesia

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.