WB urges Megawati to fight graft, poverty

JAKARTA (JP): The World Bank (WB) hailed on Wednesday the appointment of President Megawati Soekarnoputri as Indonesia's leader into times of greater political stability, but urged her to fight corruption and reduce widespread poverty.

World Bank president James Wolfensohn assured President Megawati of the bank's fullest cooperation and support.

"This is a time of great challenges and opportunity for Indonesia. President Megawati's government faces the daunting task of rebuilding the economy, tackling corruption and reducing poverty facing many Indonesians," Wolfensohn said in a statement.

But he added that meeting the challenges would take time, due to the many problems and constraints facing the country.

Wolfensohn was referring to the mound of economic and social political problems largely left unattended during the months of political bickering preceding Megawati's appointment as president.

This ineffectiveness was most apparent under the last economic team which underwent numerous reshuffles, and was marred with politicking between its ministers.

Wolfensohn said the World Bank was looking forward to working closely with the new economic team "as they develop a road map for Indonesia's recovery".

"With persistent effort, I am confident that Indonesia will prosper under President Megawati's leadership," he said.

Under the previous government, the World Bank canceled the disbursement of a US$300 million tranche due to the government's failure to meet loan conditions.

The disbursement was to have been the second tranche of a $600 million loan commitment for the country's social safety net program.

The program was launched in 1999 to mitigate the worst impact of the 1997 economic crisis on the poor. It covered subsidized rice, education, health and labor intensive work.

However, some experts have warned that Indonesia's huge foreign debts are undermining efforts to help the poor.

According to them, Indonesia's spending this year on foreign debt servicing, including on World Bank loans, is six times more than the spending for education, social and health care needs, all of which are targets for the poor.

To make matters worse, reports cited that the World Bank's social safety net loans often missed the targeted poor, while some of the loans fell victim to corruption, a suspicion World Bank officials have admitted.

Meanwhile, the IMF expressed confidence of the continuation of the current reform program under the new government.

"We agreed with the government on a set of policies and that set of policies can be put into place irrespective of the composition of the government," IMF senior resident representative in Jakarta John Dodsworth was quoted as saying by Reuters. (bkm)