Jakarta – The World Bank canceled the second US$300 million tranche of its $600 million social safety net adjustment loan on request from the Indonesian government, a Cabinet minister revealed Monday.

"We asked the World Bank to cancel [the loan] because we are no longer in favor of the JPS program that had failed its purposes," Minister of Industry and Trade Luhut B. Pandjaitan told reporters. The loan was supposed to have been disbursed before the end of December.

A government evaluation reveled that the programs failed to meet its target, said Luhut. "Trillions of rupiah of the funds simply disappeared," Luhut said as quoted by Antara.

According to Luhut, the government is preparing an alternative program to replace the JPS program. He did not say the amount of funds made available for the new scheme.

On a separate occasion State Minister for Cooperatives and Small and Medium Scale Businesses, Zarkasih Nur, said the JPS program would be integrated with similar programs at related departments pending the availability of a new program.

Zarkasih said the JPS funds were part of a 1997 World Bank loan totaling $600 million. Of the amount, $300 million had been disbursed through various programs under the JPS scheme while another $300 million was initially scheduled for disbursement inthe 2001 fiscal year.

However, as the program had proved ineffective, the government had decided to discontinue it, said Zarkasih. "So, don't get it wrong, it's not them [the World Bank] who canceled the loan, but we asked them to," he said.