July 30, 1999
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| July 30, 1999 | atimes.com | |
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| Southeast Asia Jakarta aid package comes with tight strings attached PARIS - Donors and creditors have pledged more than expected economic support for Indonesia, but in doing so have delivered a 'strong message': the aid is conditional on Jakarta staying the course on restructuring and fighting corruption. Members of the Consultative Group on Indonesia (CGI), a coordinating body chaired by the World Bank, agreed to commit $5.9 billion in loans and grants to the Indonesian government during the fiscal year ending on March 31, 2000. The money will be spent on:
Indonesian and International Monetary Fund (IMF) officials previously stated that the CGI likely would pledge about $4.7 billion, down from $8 billion last year. Donors were concerned that up to one-third of aid had been subject to "leakage," officials said. They also noted that the CGI talks were being held during a confused political period in Indonesia. No party won a majority in the June 7 parliamentary vote, the outcome of the November presidential race remains unclear, and the apparent front-runner, Megawati Sukarnoputri and her Indonesian Democratic Party of Struggle (PDI-P), has yet to lay out what donors would accept as a "credible" economic plan. Whatever the outcome, Indonesia would have to "persevere and continue to make good decisions in politically difficult times," said CGI chairman and World Bank Managing Director Sven Sandstrom. The forum will likely reconvene in about six months for follow-up talks with the new government. The mood of the two-days talks in Paris, however, was "more optimistic" than last year's CGI meeting, said a World Bank statement. "Although signs of recovery are beginning to emerge, the reform agenda ahead is complex and donors emphasized the need to stay the course on reform." Ginandjar Kartasismata, Coordinating Minister for Economy, Finance and Industry and head of the Indonesian delegation, said: "What we have achieved in the past year should not block our view on the challenges ahead. "Indonesia's return to the pre-crisis days of high growth and accelerated poverty reduction is still far from assured. The challenges ahead can only be overcome if we remain focused on our reform priorities, can manage a smooth transition to the next government and can continue to rely upon the support of the international community." In addition to an unruffled political transition in Jakarta, some donors have said they would follow events in East Timor and would reconsider their financial commitments were violence or repression to escalate. Indonesia has agreed with the United Nations to hold an independence referendum in East Timor next month but the UN has had to postpone the ballot in the face of violence by pro-Jakarta militias supported by the Indonesian military. Indonesian Foreign Minister Ali Alatas said in Singapore Wednesday that, at the suggestion of UN Secretary-General Kofi Annan, the vote had been delayed a second time and was now expected to be held on August 30. Critics have accused the Jakarta government of diverting development aid to the anti-independence campaign in East Timor and a recent UN report supported their assertions. Misgivings about misappropriated aid also plagued the ruling Golkar party in the lead-up to last month's parliamentary polls. Ginandjar sought to assure CGI members in Paris that the government was committed to a safe, fair and transparent referendum, and meanwhile would not abuse development funds. Looking beyond East Timor, he said: "Indonesia's key medium-term challenge is institutional reforms that will provide for good governance. Strengthening these foundations will require years of hard work and a fundamental overhaul of the way Indonesia does business, in the private sector and the government alike. "Freedom of the press and the active role of civil society can ensure that the people will not be deprived of their rights and of their well-being by wrong and bad governance." The $5.9 billion pledged at the CGI talks will help Indonesia plug its projected $9.8 billion budget deficit in the 1999-00 fiscal year. The remainder is expected from reschedulings of foreign debt and project finance through export credit agencies in countries such as Japan, which is Indonesia's largest foreign investor. (Inter Press Service) | |||||||||
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