WB to disbursing $1b for RI this month

Thu, 05 Feb 1998, 00:00 WIB | Source: JP

JAKARTA (JP): The World Bank will disburse US$1 billion this
month out of the $4.5 billion it pledged in aid to Indonesia as
part of the three-year IMF-led rescue package, Finance Minister
Mar'ie Muhammad has said.

Mar'ie told newsmen after accompanying World Bank President
James D. Wolfensohn to a meeting with President Soeharto
yesterday evening that $450 million of the disbursement would be
allocated to help farmers.

"Farmers affected by the recent prolonged drought will be
helped to procure inputs such as seeds and fertilizer," Mar'ie
said.

The World Bank also pledged to help the government procure
medical supplies for public hospitals and rural health centers,
he added after the meeting which Wolfensohn said lasted for about
90 minutes.

Wolfensohn later told a news conference that he fully
supported the multilateral guarantee scheme for letters of credit
issued by Indonesian banks proposed by Singapore Prime Minister
Goh Chok Tong at his meeting with Soeharto Tuesday evening.

"We are going to do everything to make sure that the
proposition is put forward and supported," he said.

Wolfensohn said the guarantee scheme was important for
normalizing Indonesian imports to help the country's export
industry.

The World Bank chief arrived here yesterday afternoon for a
two-day visit as part of his tour of several East Asian
countries.

He said his institution also was helping Indonesia to
restructure its financial sector.

He said he devoted a great deal of his talks with Indonesian
ministers here to discussing crash programs such as job-creation
projects designed to protect the poor from the impact of the
economic crisis.

Earlier yesterday afternoon, Wolfensohn announced that the
World Bank, the Asian Development Bank and the Indonesian
government had agreed to accelerate the disbursement of funding
for labor-intensive programs to employ workers affected by the
economic crisis.

He said the World Bank would accelerate the disbursement of a
$150 million loan this year, including $100 million from the
World Bank, for labor-intensive projects.

"The programs are intended to create more than 75 million man-
days of low-wage jobs during the remainder of 1998," he said
during a visit to a slum area in North Jakarta.

Wolfensohn stressed the role of the bank in helping people to
minimize economic hardship created by the crisis and the painful
adjustment process.

Millions of people have lost jobs in the construction,
property and labor-intensive industries due to the economic
crisis which has been gripping the country since the middle of
last year.

Fears have increased that the unemployment situation may
threaten the country's socio-political stability.

Wolfensohn said the World Bank agreed with the Indonesian
government to both reduce requirements for Indonesian matching
funds and to authorize a nationwide program of emergency, labor-
intensive projects to help workers hit by the crisis.

Both agreed to reduce Indonesia's cost-sharing requirement in
15 ongoing projects to 20 percent or less of the project costs
from the previous average of more than 40 percent, the statement
said.

Both also agreed to establish a new labor-intensive work
category in seven current urban projects to support emergency
small-scale programs in 13 provinces in Java, Bali, Kalimantan,
Sulawesi, Irian Jaya and East Timor.

The seven projects were the Sulawesi-Irian Jaya Urban
Development project, the Surabaya Urban Development project, the
Semarang-Surakarta Urban Development project, the Kalimantan
Urban Development project, the East Java Urban Development II
project, the Sulawesi Urban Development II project and the Bali
Urban Infrastructure project.

The statement also quoted Asian Development Bank Resident
Representative for Indonesia T.C. Patterson as confirming that
ADB loans had similarly been amended and that the remaining
provinces not included in the World Bank urban projects would be
assisted by ADB. (prb/jsk/08)