WB to approve social safety net loan soon

JAKARTA (JP): The World Bank is set to approve the delayed US$600 million social safety net adjustment loan on May 18, just weeks before the June 7 general election.

The bank said in a statement distributed to journalists at its office on Wednesday that the timing of the approval was driven by the fact that all key decisions on the design and budget of the social safety net program had been made by mid-April.

It said the loan originally was delayed because the list of social safety net program policy reforms was not delivered until March 31.

"When the list is accomplished, however, we are under an obligation to move ahead -- regardless of the date," the statement said.

The World Bank's decision to disburse the fund before the elections is sure draw criticism from vocal non-governmental organizations (NGOs), an analyst said.

Critical NGOs and some opposition parties have asked the World Bank to delay the disbursement of the social safety net loan until after the elections.

Opposition parties fear the ruling Golkar Party will use the money to support its reelection bid.

The World Bank, however, stuck to its decision, saying the majority of NGOs and political parties supported the disbursement of the loan.

"While some NGOs have been very vocal in their opposition to our going ahead with the program, we have heard from many more -- both NGOs and political parties -- privately who see the pragmatic advantages of moving ahead," the World Bank said.

World Bank Country Director for Indonesia Mark Baird said relating the loan disbursement with the timing of the elections was irrelevant.

"The level of budget spending and the implementation of these programs during the campaign period is not dependent on the disbursement of our funds," he said.

He said the bank sought to put in place conditions to improve the effectiveness of the social safety net program by protecting the program's budget, improving the design of the program and establishing a monitoring strategy.

By setting up these conditions, the bank wants to ensure good programs get money and the bad ones are improved or discontinued. It also wants to reduce leakage and ensure the programs reach the right targets.

Baird said the World Bank had supported and helped the government manage its social safety net program since the onset of the economic crisis, but did not directly finance any of the safety net programs.

However, he said the bank indirectly financed the social safety net program through its budget support loan, totaling $1 billion in the 1998/1999 fiscal year.

In addition to the $1 billion policy support loan, the World Bank also disbursed $345.8 million in project-related loans.

The World Bank's cumulative lending to Indonesia as of March 1999 approached $25 billion, with 75 active projects and 207 inactive projects. Of the $25 billion, $19.8 billion has been disbursed and $8.2 billion has been repaid.

Total commitments for the 75 active projects in 1999 stand at $8 billion, of which about $4.3 billion has yet to be disbursed. Indonesia's total outstanding debt to the World Bank is estimated at $12 billion -- nearing the World Bank's $13.5 billion loan ceiling for a member country. (rid)