World Bank to release $1.4b in new loans for RI

JAKARTA (JP): The World Bank's board of directors will meet today to finalize the disbursement of US$1.4 billion loans for Indonesia.

The National Development Planning Board (Bappenas) said in a statement on Monday the loans comprised $600 million for social safety net adjustments, $500 million for policy reform and $300 million in water resource sector adjustment loans.

The $600 social safety net loan was initially scheduled for release in March, but was delayed by the World Bank following reports from non-governmental organizations of abuse in the aid disbursement. Organizations said the aid, aimed at helping the poor survive the crisis, had been abused by the ruling Golkar party to gain support ahead of the June general election.

Bappenas chairman Boediono later admitted the abuse, but declined to name the political parties involved.

The media have also reported that half of the Rp 17 trillion ($2.2 billion) social safety net budget allocated during the 1998/1999 fiscal year ending in March had not reached the intended target.

The government has allocated some Rp 6 trillion for social safety net programs in the 1999/2000 fiscal year.

In the new letter of intent sent to the International Monetary Fund last week, the government said it was working in consultation with the World Bank on three fronts to support social safety net programs.

They include measures to ensure appropriate allocations within the social safety net budget; improving the design of social safety net programs, including better targeting expenditures and setting up monitoring arrangements, both national and regional, that aim to reduce leakage and ensure the programs are successful.

"Special measures are being taken to ensure that social safety net programs are monitored carefully and budgetary resources safeguarded," the letter said.

The government would introduce a new monitoring system which would include members of civil society to provide timely and accurate information to the public so that local communities were empowered to monitor the programs, the letter said.

Bappenas said the policy reform support loans were to uphold a prudent fiscal and monetary policy and support the banking and real sector restructuring programs' efforts to root out corruption.

The water resources loan was aimed at supporting the reform program manage the country's water resources. (rei)