WB upbeat government can fight corruption

WB upbeat government can fight corruption

JAKARTA (JP): World Bank president James Wolfensohn expressed
confidence on Friday that the Indonesian government would be able
to confront and root out corruption, reduce the foreign debt
burden and boost economic recovery.

Speaking to journalists after a breakfast meeting with
President Abdurrahman Wahid and a number of Cabinet ministers,
Wolfensohn said he endorsed Abdurrahman as someone who could
provide cleaner leadership for Indonesia on the corruption front.

He said from his meeting with economic ministers on Thursday
night that he found there was a very keen desire from the
government to confront the issue of corruption.

"It's an issue that has been in the public eye for a long time
here and what you need is sound, honest leadership and I think
President Wahid is such a person. He certainly has my
confidence," he said.

After meeting Abdurrahman, Wolfensohn left for the West Java
capital of Bandung, where he was greeted by a demonstration of
about 150 students.

They demanded Wolfensohn stop the bank's loans to Indonesia,
which they said were corrupted by government officials.

The World Bank's image has been tarnished by allegations of
mismanagement of its program in Indonesia. An internal World Bank
report in 1998 alleged that up to 30 percent of its loans here
were siphoned off.

A report this week on Australian television alleged that the
Indonesian government used aid money from the World Bank to fund
anti-independence militias that waged a reign of terror in East
Timor in 1999.

Wolfensohn said here that the allegations surrounding the
misuse of the bank's funds first surfaced last year, and the bank
thoroughly investigated them at the time and found them to be
baseless.

"It's an old story, we looked at the original evidence and we
found no evidence," he said.

Wolfensohn, who is on a four-day visit in Indonesia, is
scheduled to travel to East Timor on Monday.

He said with Abdurrahman as President, the bank was confident
now that its loans to Indonesia were getting to where they were
supposed to go.

"We now have a government that is keen to be transparent in
where they spend the money," he said. "To the best of our
knowledge, the money we're putting in now is arriving at the
programs they're designed for."

The World Bank, a major lender to Indonesia, has lent more
than US$12 billion to the country. It committed a further $1.5
billion for the 2000 budget year at a donors meeting last month.

The government's outstanding foreign debt is estimated to have
reached $72 billion this fiscal year, ending March 31, which is a
sharp increase from $68.4 billion in the previous 1998/1999
fiscal year.

In addition, the government has also booked a huge domestic
debt, estimated to reach an equivalent of $74 billion by March
31.

Wolfensohn said the World Bank was continuing to pursue ways
to soften Indonesia's debt burden.

"Indonesia, as you know, has a substantial debt and so the
important thing is not to increase it unless you use the funding
for social purposes," Wolfensohn said.

"We're also looking for ways where we can increase grantable
funds."

Abdurrahman's administration has made it clear that it is
seeking ways to lower its hefty foreign debt and is beginning to
finance its budget domestically, through hiking tax revenue and
selling and privatizing state assets.

Wolfensohn said he considered the government's 2000 draft
budget, currently being debated at the House of Representatives,
as sensible in terms of reducing budget deficits and keeping the
economy moving forward.

"So I would say that after a very difficult period they're on
track and that's the impression, I believe, of the (International
Monetary) Fund as well," he said.

According to the Central Bureau of Statistics, Indonesia's
economy grew better than expected to 0.23 percent in 1999, after
contracting 13.2 percent in 1998.

The bureau estimated the economy should grow stronger by 4
percent this year.