Economy & Business

World Bank Disburses New Loan for Indonesia
03 Desember 2003

TEMPO Interactive, Jakarta:The World Bank has allocated between US$450 million and US$850 million in loan funding for Indonesia.



This loan is aimed at supporting the projects that focus on the handling of poverty cases in Indonesia’s regions, including the health, education, agricultural research and information, irrigation and public services.



“Our programs will focus on increase of quality, response and public institutions’ accountability in the development process,” the World Bank’s Senior Representatives for Indonesia Andrew Steer told reporters at the Jakarta Stock Exchange (JSX) building, Jakarta, on Wednesday (3/12).



According to Steer, if the Indonesian Government shows extraordinary performance in carrying out reform programs, then this could mean more investment in Indonesia, as well as improved service and state administration quality.



In this case, the World Bank would increase its loan to US$1.4 billion per year.



About one-third of the total loan, that is amounting to around US$230 million per year, will be in form of a non-interest loan and can be repaid over a 35-year period.



However, an administration fee of 0.75 percent of the unused amount will be charged.



Steer said that the loan would be allocated based on business fundaments designed by the World Bank



Twenty-five percent of the loan will be used to improve community-development based programs, 40 percent others will be for local services in establishing higher accountability at regency and provincial level. 15 percent for public utilities with the focus on the efficient supply of clean water and energy and the remaining 20 percent will be allocated for the national loan.



Jannes Hutagalung, Deputy to the Indonesian Coordinating Minister for the Economy, said that the loan would be distributed through the Minister of Finance according to the Minister’s Decision number 35.




This stipulates that local governments cannot borrow foreign loans directly as the allocation of the loan funds must be carried out by Minister of Finance.



However, the World Bank requires a transparency standard and participation process as regards the local governments’ budgets.

Fitri Oktarini - Tempo News Room