World Bank to speed up loan projects after Bali

World Bank to speed up loan projects after Bali

The Jakarta Post, Jakarta

The World Bank plans to accelerate the disbursement of
project-related loans in areas where revenue from the tourism
sector is likely to fall, in one of the Bank's initiatives to
help Indonesia cope with the impact of the Bali terrorist strike.

World Bank country director Andrew Steer said on Thursday that
the loans could amount to between US$400 million and $500
million, with disbursements possibly spread over next year rather
than later.

"These are injections of resources that will create jobs and
generally be helpful in times when there'll be layoffs," Steer
told The Jakarta Post in an interview.

He said Bali would also likely receive loans from projects for
which it was previously not eligible because of its relatively
more advanced economy.

One example was the Kecamatan (regency) Development Project
(KDC), which provided small-scale investments for projects that
local communities rather than the Bank or the government
initiated, Steer explained.

He said that the KDC projects required only small investments
of about $10 million to $20 million for the construction of
roads, water-supply networks, schools and clinics.

"We could say Bali is eligible as there are other areas where
tourism is strong ... we would then open that facility to those
areas for the next year," he said.

Bali is facing tough times ahead as tourists will likely stay
away from the island following the recent bomb attack that killed
at least 182 people, mainly foreign tourists.

Bali has been a favorite tourist destination, generating about
one third of the some $5 billion a year the tourism sector
contributes to the economy.

Now many expect the impact of the terrorist strike to spill
over to tourist spots across the country. The island was long
regarded as a safe haven amid the numerous armed conflicts around
the country, including bomb blasts and violent protests in
Jakarta.

Steer said getting the World Bank projects on the ground
faster would mitigate the impact of fewer tourist arrivals while
also helping offset the overall slump in investment because of
low business confidence.

Economists have revised downwards their forecasts for this
year's economic growth target, now discounting revenue from the
tourism sector.

The government is following the move with plans to revise the
budget assumptions for its state budget next year.

For the same reason, the foreign creditor countries in the
Consultative Group on Indonesia (CGI) have decided to postpone
their annual meeting to pledge aid for Indonesia's 2003 budget
needs.

The CGI and the government would, however, meet informally
later this month to discuss the implications of the Bali attack
and ways of helping Bali cope with the tragedy.

"We can help the government think through the impact and there
are possible options; we have some experience of bad events
happening in other countries."

He said the Bank could also help explain to the global
business community about the economic impact of the Bali blasts,
stressing that "these are problems but problems with solutions."

"I think we can play a viable role there as a CGI chair and in
general as the World Bank Group, including the IFC (International
Finance Corporation)," he said, referring to the World Bank's
commercial lending arm, which uses its investments to stimulate
economic activities in developing country.