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

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)