World Bank grants Indonesia loans to support antigraft drive

The Jakarta Post, Jakarta

The World Bank granted the government US$360 million in loans on Wednesday, part of which has been allocated specifically for the government's war against corruption.

In total, some $60 million will be set aside for financial and technical support to help the government improve its efficiency and transparency, the bank's country director Andrew Steer said.

"These reforms, while seemingly technical, represent a broad attack on the very roots of corruption in Indonesia," Steer said in a statement.

The rest of the loans will go to help support other reform programs the government is embarking upon, including retaining macroeconomic stability, said the statement.

"Indonesia is entering a new stage of reform where the focus has shifted from economic stabilization to long-term growth and poverty reduction," it added.

Steer was referring to the country's good record in achieving and retaining macroeconomic stability, as evident by, among others things, the declining trend of debt-to-gross domestic product (GDP) ratio to around 70 percent this year as compared to 130 percent in 2000.

Widespread corruption -- which has created inefficiency and a high-cost economy, thus eroding the country's economic competitiveness -- is seen as among the hardest challenges that the government has to address if it wants to generate higher economic growth.

Various surveys have confirmed that the ill-practice, mostly in state institutions and state enterprises, has become endemic, putting Indonesia among the world's most corrupt nations.

President Susilo Bambang Yudhoyono has repeatedly promised to prioritize the graft-eradication program during his tenure, to make the economy more competitive and, at the same time, avoid further state losses.

The loans, the bank said, were at significantly lower interest rates and carry longer maturity profiles than private loans.

The World Bank is one of the country's main lenders, and is currently grouped under the Consultative Group on Indonesia (CGI) -- a grouping of Indonesia's major donors.