Jakarta – The World Bank today gave its seal of approval to the new government of Indonesian President Abdurrahman Wahid for its handling of economic affairs during its first 100 days in power.

"This government has been in power exactly 100 days today," the bank's country director Mark Baird told a briefing ahead of the Consultative Group on Indonesia (CGI) donors' meeting next Tuesday.

"During that time they have not only demonstrated a willingness to tackle issues like Bank Bali but they've put in place a letter of intent and they have submitted to parliament ... a conservative budget, I would say a balanced and realistic budget as well," Baird said. "That's not bad for 100 days."

Responding to criticism that no-one has yet been jailed for the politically-explosive Bank Bali case, or for another scandal involving the Texmaco Group, Baird said such issues will be handled eventually.

"What you're saying is that's not enough and we agree," Baird said. "That's the agenda that's laid out for the future and this government has to implement that agenda in a much more, in some ways difficult, political environment than in the past. "So yes, it's going to be tough going. But I would still argue that what they have done to date is certainly worthy of support.

In a paper distributed at the briefing, the World Bank stressed the importance of judicial reform, saying corruption has cost Indonesia 2 percent in annual economic growth since the 1960s.

"It [corruption] adds to the cost of doing business," the paper said. "It eats into the very moral fibre of society. And at a more material level, since donors increasingly base their allocations on the quality of governance in recipient countries, it could actually lead to a smaller external financing envelope."