WB to disbursing $1b for RI this month

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)

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