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Creditors pledge $4.8b to Indonesia
TOKYO (JP): The
International Consultative Group on Indonesia (CGI) agreed on Wednesday
to provide US$4.8 billion in new loans to Indonesia to fill part of its
budget deficit in 2001 fiscal year beginning in January.
Coordinating Minister for the Economy Rizal Ramli and Ministerof Finance
Prijadi Praptosuhardjo and World Bank vice president for East Asia and
the Pacific region Jemal-ud-din Kassum told a joint news conference that
an additional $530 million was pledged for technical assistance grants
and support for Indonesian non-governmental organizations(NGOs).
announced their pledges at the close of the two-day meeting
afterreviewing the government's priorities, policy initiatives, and
strategies for implementing key economic, social and institutional
reforms central to Indonesia's recovery. In all, donors pledged US$4.8
billion to support the government budget," said Kassum who chaired
representatives of five NGOs, including International NGO Forum on
Indonesian Development (INFID), were fully involved in the two-day
meeting. "The details of the commitment of each CGI member will be
announced later," Kassum added.
The World Bank,
Asian Development Bank and Japan usually put up more than85 percent of
the CGI loan commitment.
Rizal expressed his
satisfaction with the new loan pledges, pointing out that the
international support would help Indonesia recover from the current
economic crisis and achieve significant economic growth next year.
success of this meeting, strong support and partnership from all of the
delegates, we believe that Indonesian economy will get stronger and
stronger next year and in the years to come," Rizal said.
"I was struck
by the very open and substantive exchange of views. This created a
positive atmosphere and reinforced the strong partnership betweenthe
government and donor community," Rizal noted.
In a related
development, President Abdurrahman Wahid told Indonesian reporters during
a refueling stop on Wednesday afternoon at the Hong Kong airport on his
way from Malaysia to Korea that of most importance to him was not the
amount but the spirit behind the CGI pledge.
impressed by the openness and spirited exchange of views that took place
at the CGI meeting," the President added.
however, that the government would only draw upon these funds if
absolutely necessary because the loans would add to already huge
government debt burdens.
will only draw upon these funds if absolutely necessary andonly after
exhausting every alternative to meet our development needs from domestic
sources," Rizal told the closing session of the CGI conference.
however, seemed unsatisfied with the progress achieved by thegovernment
in dealing with the economic reforms, urging Indonesia to accelerate the
pace of its reform measures.
understood the huge constraints confronting the government and the
difficulty of tackling such deep-rooted problems. At the same time,
theinternational community wanted to accelerate momentum, especially in
key areas such as legal and judicial reforms, decentralization, and
forest management," Kassum pointed out.
Kassum added, urged the Indonesian Bank Restructuring Agency (IBRA) to
adhere to a set of principles aimed at maximizing recoveryfor the state,
to transparency of the process and to procedures for oversight for all
large debt cases.
urged the government to deal with domestic political and security issues
including regional unrest in Maluku, Aceh and West Irian (Irian Jaya),"
The donors warned
that failure to take appropriate action could weaken market sentiment and
slow or even stall recovery.
The CGI members
also stressed the critical importance of allocating scarce government
resources to the highest-priority needs, especially for poverty reduction
and environmental sustainability.
According to Kassum,
the meeting did not discuss the possibility of debt relief for Indonesia.
He indicated that the international donors might continue providing
concession loans to Indonesia to help the government reduce its burden.
Rizal could not
hide his feeling of joy and relief although he also looked tired.
Accompanied by Minister of Finance Prijadi Praptosuhardjo, Rizal left the
press conference mid-way, apparently without informing Kassum who still
entertained questions from journalists.
wanted to telephone the President about the result of this meeting,"
Minister of Settlement and Regional Infrastructure Erna Witular said
about the early departure of the two ministers.
According to Erna,
President Abdurrahman Wahid wanted to get the results of the meeting
before attending the Asia-Europe (ASEM) summit in Seoul.
Sources close to
the Japanese government disclosed on Wednesday, that Japan as the biggest
single money lender to Indonesia, succeeded in convincing the U.S.
delegation not to mix politics, especially the situation in West Timor,
with economic assistance to Indonesia.
"We should not
push the new civilian government too hard. The problems ofmilitias and
violence in other provinces must of course be seriously handled by the
government. But we must continue providing assistance to thenew
government," Japanese officials were quoted as saying.
Rizal himself had
appealed to the CGI members to adopt flexibility in thedesign and
implementation of projects in a decentralized administration system and
to extend financial support in the field.
"We are very
encouraged with the positive reactions given to our proposals," said
delegation comprised six Cabinet members, Attorney GeneralMarzuki
Darusman and acting Bank Indonesian Governor Anwar Nasution.
The meeting was presided over by Kassum, and attended by delegates from the 35 members of the group, including the governments of Japan, U.S., Australia, the Netherlands, Germany, Italy, Canada, the European Union, IMF, ADB and the Islamic Development Bank (IDB).