- The Washington Times - Wednesday, January 22, 2003

JAKARTA, Indonesia, Jan. 22 (UPI) — International donors on Wednesday pledged to give Indonesia $2.7 billion to help the country's budget deficit, but cited concerns on an apparent lack of political will to end corruption.

The pledges were made at the end of a 2-day meeting in Bali attended by 30 members of major donors of the Consultative Group on Indonesia organized by the World Bank amid nationwide anti-government protests against recent increases in utilities prices.

Indonesia's Economic Minister Dorodjatun Kuntjoro-Jakti said this year's pledge represented the drop in support by the CGI. Last year Indonesia received aid from CGI totaling $3.14 billion.

"This shows the government's commitment to reduce its dependence on foreign aid and more rely on domestic sources," Kuntjoro-Jakti said.

Indonesia wants to achieve a balanced budget by 2005, to reduce the burden of servicing loans and to channel funds into pubic spending.

Daniel Critin, the International Monetary Fund's Asia-Pacific senior adviser described aid is key as Indonesia's economic growth is short of the 6 percent expansion needed for job creation. Indonesia has 220 million people, some 40 million of whom are unemployed.

But the World Bank highlighted the slow progress being made in cleaning up a notoriously corrupt judiciary and the equally corruption-ridden forestry sector.

"On the justice sector, the general feeling was that the progress has been slow, and the issues have been inadequately addressed," said Jemal-ud-in Kassum, the World Bank vice president for East Asia and the Pacific region.

In the forestry area, Kassum said, the donors "expressed disappointment in the lack of progress in addressing the forestry issues," adding that they reiterated their conclusion that "sustainable solutions require government wide cooperation."

Donors were also uncomplimentary about the government's efforts to improve the investment climate.

"Urgent attention needs to be paid to improving security, strengthening the justice sector, reducing bureaucracy and red tape, assuring planned new regulations maintain stable market flexibility, reducing uncertainties caused by decentralization and avoiding a power crisis in the future," Kassum said.

Altogether, CGI donors have pledged $3.1 billion to assist Indonesia with various development and emergency programs in 2003, of which $2.7 billion has been allocated to the budget deficit.





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