Jakarta – Indonesia's main aid donors on Wednesday pledged up to 4.7 billion dollars in loans to support the country's 2000 budget but deferred a decision on rescheduling 2.2 billion dollars in debt.
"Indonesian donors committed strong support to the government of Indonesia, pledging to disburse up to 4.7 bln USD for the fiscal year 2000," the World Bank said in a statement at the end of a two-day meeting of the 33-member donor forum, the Consultative Group on Indonesia (CGI), in Jakarta.
The bank said the largest donor was Japan, which offered 1.56 billion dollars, followed by the World Bank itself with 1.5 billion and the Asian Development Bank with 1.065 billion.
But Indonesian Finance Minister Bambang Sudibyo, asked about an Indonesian request to CGI members to reschedule some 2.2 billion dollars in debt, said: "This matter must be discussed in the second Paris Club" later in the year. The World Bank statement said the next CGI meeting would be in Tokyo in October.
It added: "Donors representing 33 countries and international agencies lauded Indonesia for completing the political transition in a way that has received strong support at home and abroad.
"Donors noted with satisfaction the stabilisation of the economy and early signs of recovery."
The bank added the CGI welcomed an economic recovery programme put forward by the government of President Abdurahman Wahid and contained in a letter of intent to the International Monetary Fund (IMF).
The Indonesian government last month released the letter outlining the programme and a new budget for April-December 2000.
The bank said the government and the donors agreed to speed up corporate and bank restructuring to revitalise the private sector and job creation. They also agreed economic programmes should emphasise poverty alleviation and investment in public education and healthcare. Improvements in "governance" were also considered by all as critical, the World Bank said.
In addition, the statement quoted Indonesia's Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie as saying: "We stand at the crossroads in the history of Indonesia. "We are determined to create a society that is just and which delivers broad-based economic growth to all people."
The two-day CGI meeting in Jakarta was marked by warnings from both Indonesian officials and the World Bank that Indonesia's path to economic recovery after the battering of the 1997 regional economic crisis was fragile.
Finance Minister Sudibyo told the meeting on its opening day Tuesday that although the economy had stabilised somewhat, there was as yet no solid evidence of firm recovery.
"Of great concern is the fact that investments continued to decline. In fact, most of the decline in economic activity during the crisis was due to this drop in investments," Sudibyo said.
He said rising consumer demand, perhaps filled by improved sentiment or by fiscal spending, "can only be a temporary growth stimulus."
"If investment does not pick up, the productive capacity of our nation may be unable to meet the demand placed on it. The key to resume sustainable economic growth will rely on policies that stimulate investments," he said. He said such an upturn had to be led by the private sector.
Sudibyo added that from recent figures on inflation, interest rates and monetary growth, it would appear macroeconomic stability had been achieved.
"Nonetheless, we are acutely aware that this stability is very fragile," he said, referring to a continued decline in capital goods imports and mounting debt as well as investors' jitters.