WB vows conditional support for Indonesia

WB vows conditional support for Indonesia

JAKARTA (JP): The World Bank pledged on Thursday to help
finance Indonesia's 1999/2000 budget deficit estimated to reach 6
percent of gross domestic product.

World Bank vice president for East Asia and the Pacific region
Jean-Michel Severino, however, said that its support would hinge
on the country's consistent implementation of the economic reform
program.

"We have a support plan for budget deficit in Indonesia, but
this support as usual will be on condition of the progress of the
reform ... this fiscal and next fiscal year as well," he told
reporters after meeting President B.J. Habibie together with the
Bank's newly appointed country director for Indonesia Mark Baird
and outgoing country director Dennis de Tray.

Indonesia is expected to need a total of US$10 billion in
foreign loans to finance its budget deficit in the 1999/2000
fiscal year starting April.

The government has said it already has $4 billion in project
loans, while the remainder is yet to be secured.

The Coordinating Minister for Economy, Finance, and Industry
Ginandjar Kartasasmita has said that Japan, the World Bank, and
the Asian Development Bank -- traditionally Indonesia's major
lenders -- were expected to provide the further $5 billion needed
in foreign loans.

Ginandjar recently visited Tokyo to ask for part of the $30
billion Miyazawa aid program promised by Japan last year to help
revive crisis-hit Southeast Asian nations.

The Consultative Group on Indonesia (CGI) said last week after
a meeting here that Indonesia's major donor countries and
institutions would continue to provide financial support only if
the government consistently implements its reform program within
a framework of sound macroeconomic policy.

Uncertainties over the government's reform program -- designed
together with the International Monetary Fund -- had reemerged
recently following the House of Representatives' opposition to
the costly banking recapitalization plan proposed by President
Habibie.

Severino said the meeting with Habibie mostly focussed on the
bank's continuing support for the country's reform programs.

"We spend most of our discussions on the World Bank, which is
supporting the reforms in Indonesia and helping in pushing ahead
with the financial sector reform, the corporate restructuring and
the social safety net, as well as the governments anticorruption
policy," he said.

He said the bank was preparing a loan package to support the
social safety net program, but that this needed further
discussions with the government to improve the management,
efficiency, and transparency of the program, which has been
designed to help the poor in surviving the 18-month-old economic
crisis.

The bank reported in the recent CGI meeting that the social
effects of the crisis have been less dramatic than were earlier
estimated.

"People in urban areas are hurting more than those in the
rural areas and people on Java appear to have borne more of the
brunt of the crisis than those on other islands," the bank said
in its latest study on the social impact of the crisis. (rei/prb)