World Bank wants good governance, anticorruption
World Bank wants good governance, anticorruption
JAKARTA (JP): The World Bank has again called on President
Abdurrahman Wahid's administration to pursue good governance and
anticorruption measures to improve confidence in public
institutions and development programs.
The bank's country director for Indonesia Mark Baird said at a
seminar on Thursday the new government was committed to fighting
corruption.
"But progress has been painfully slow," he said.
He suggested the government, together with the House of
Representatives (DPR), accelerate judicial reform to restore
confidence in the country's legal system.
"It is essential to restore confidence in the courts, so that
contracts can be enforced and those involved in corruption can be
held accountable," he said.
To reduce corruption in the bureaucracy, Baird said, there was
a need for fundamental reforms in the civil service. But higher
salaries alone, without accountability, would not suffice to root
out corruption.
Decentralization and greater regional autonomy, if implemented
properly, could reduce corruption because they involve broader
participation in development projects, he said.
"Decentralization needs to be managed carefully, and local
governments need to gear up quickly to handle their new
responsibilities," he said. "Not doing so will increase the risk
that quality of service delivery will actually decline."
In addition, Baird said, government procurement systems and
financial management needed to be strengthened at all levels of
government.
He said corruption, which had become rampant in the latter
years of the Soeharto regime, was raising some serious questions
about the sustainability of the development process in Indonesia
and the role of the World Bank.
"Although the World Bank maintains tight controls over the use
of its funds, we cannot fully isolate our operations from
problems of systematic corruption.
"This is a major concern to our shareholders and civil society
groups in Indonesia," Baird said.
To help reduce the level of corruption in Indonesia, Baird
said the bank was strengthening control mechanisms in every
project it financed.
Besides corruption, he said the World Bank was also concerned
about the country's exploding debt, from a precrisis level of 24
percent of gross domestic product to more than 92 percent now.
According to the Bank, total government debt rose from US$51
billion in March 1998 to $147 billion today. Almost all of the
recent increase in debt is due to the domestic cost of
recapitalizing banks. The government's external debt is now $63
billion, of which about $12 billion is owed to the World Bank.
He said this high level of debt severely limited the capacity
of the new government to borrow and spend on development programs
and that debt servicing would absorb 45 percent of government's
revenue in the current fiscal year.
The World Bank, Baird said, supported the government's efforts
to seek and obtain debt rescheduling, and it had canceled
undisbursed commitments of its loans to Indonesia and renewed
Indonesia's access to the bank's International Development
Assistance (IDA) soft loans.
"We expect lending by the World Bank to decline from the
exceptional levels of the past few years," Baird said.
The bank, he added, had pledged to disburse $1.5 billion
during the current fiscal year, but this may well be reduced in
line with the lower borrowing requirement approved by the House.
He said the bank would phase out general budget support loans
and would shift back toward financing development programs
focused on poverty reduction.
He noted that good governance and anticorruption measures,
equal opportunity and access for the poor as well as economic
recovery and sustained growth would play an important role in any
of the Bank's poverty-reduction strategies in Indonesia. (rid)