Jakarta – Indonesia received a symbolic boost of confidence from donor countries yesterday, but was told in clear terms that further funds will be tied to definitive progress on several key reform issues.

At stake will be further funds from the Consultative Group on Indonesia (CGI), a group that last October pledged US$4.8 billion in aid to Indonesia. The government has used CGI money to cover its budgetary holes, as well as fund specific economic and poverty alleviation programmes in the past.

This week's meeting between the government and CGI members – 19 countries and 14 international banks and aid agencies – was not a forum for pledging loans, but rather a review session of Indonesia's progress since last year.

Several top Indonesian officials briefed CGI representatives on difficult issues facing the country, including the budget deficit, rampant deforestation, implementation of the decentralisation programme, and how to support the country's small businesses.

The donors, according to the World Bank's top official in Jakarta, Mr Mark Baird, recognised "the extremely difficult political context in which the Indonesian economic team was having to cope with" and "the severe challenges facing Indonesia".

Hinting that the international community's patience is wearing thin, however, Mr Baird also stressed that donor countries have been "waiting for some time to hear reform progress".

"Donors urged the government to persist with its reform agenda and assured it of continued support should it do so," he said.

Dr Rizal Ramli, Indonesia's chief economic minister, admitted yesterday that Indonesia's "fiscal position will remain vulnerable for some time".

"In the six months since we met in Tokyo, we turned from a situation where we were beginning to see sustainable growth to that of an immediate urgency to secure our fiscal sustainability," he said.

But the minister also tried to assure donors that his economic team would push forward reform programmes during the coming weeks in order to satisfy Indonesia's supporters.

The CGI review took place while an IMF team is also on the ground in order to review the agency's US$5 billion rescue package for Indonesia, a process that many observers have said will not end favourably for the country.

Analysts argued that confidence in Indonesia's ability to reform has dropped to a point where international agencies have to start playing "very hardball" in order to see progress.

Mr Anggito Abimanyu, a top Finance Ministry official, said: "The government is in a corner. We not only have to please everyone, but we also cannot afford to anger anyone."