---------------------------------------------------------- FREE for JOIN Indonesia Daily News Online via EMAIL: go to: http://www.indo-news.com/subscribe.html - FREE - FREE - FREE - FREE - FREE - FREE - Please Visit Our Sponsor http://www.indo-news.com/cgi-bin/ads1 ---------------------------------------------------------- Fresh funds into Indonesia to come with strings By Andrew Marshall JAKARTA, July 25 (Reuters) - Crisis-hit Indonesia meets its main international donors this week to ask for $5.5 billion to $6 billion in fresh loans, and while creditors are expected to come up with the money there will be conditions attached. High on the agenda at the Consultative Group for Indonesia (CGI) meeting in Paris on Tuesday and Wednesday is corruption. Donors say too much money has been misused or siphoned off in the past. They want guarantees Indonesia is cleaning up its act. The country's turbulent politics also hangs over the meeting. Coalition-building is under way after its first free elections in 44 years, and Indonesia's next president is due to be selected in November. Creditors, who have already injected more than $45 billion into Indonesia since the crisis struck, are being asked to pledge more money with no clear idea of who will soon be running the country. They will want assurances the political process is on track. Some of Indonesia's opposition parties have said the meeting should be postponed until a new government is in place. But the World Bank insists it is crucial the meeting is not delayed. ``We believe there are very good reasons to keep the focus on the economic reform programme. We believe it is important to ensure that the budget... is financed this year,'' said Mark Baird, country director for the World Bank in Jakarta. ``We also believe that the fundamental issue of governance and corruption that was addressed at the last CGI should be addressed again. And so for those reasons, the meeting will proceed.'' The Bank says there are four key items on the CGI agenda. Most immediately, Indonesia needs money to plug a projected budget gap of 5.8 percent of gross domestic product in the fiscal year to end-March. Of the $9.8 billion Indonesia needs in the 1999/2000 fiscal year, the CGI will be asked to pledge $5.5 billion to $6 billion. Last year, at the height of the crisis, the CGI pledged $7.9 billion, although only $6.2 billion was actually disbursed. Secondly, Indonesia already has to start trying to secure financing for the 2000/01 fiscal year. The World Bank says the country will need around $8.3 billion in external financing in 2000/01 to cover a budget deficit of four to five percent. Donors will be pushing Indonesia to raise more money from domestic sources, such as privatisation and cutting subsidies, in order to wean itself of foreign loans. Creditors will also be reviewing progress in Indonesia's economic reform programme and giving their views on what must still be done. Economists agree that the country is past the worst, but that much still needs to be done, particularly in terms of corporate debt restructuring and bank recapitalisation. Finally, governance and anti-corruption measures will be a key part of the agenda. The World Bank says Indonesia will be asked what it has done to prevent leakage of public funds. The issue of East Timor, which has haunted Indonesia's international reputation since it invaded the former Portuguese colony in 1975, may also crop up at the CGI. Indonesia is facing international criticism for failing to end violence by pro-Jakarta militias in East Timor trying to scupper a U.N.-supervised independence vote scheduled for August. ``I certainly understand from a number of donors that they share a strong interest in ensuring that the U.N.-process in Timor proceeds smoothly,'' Baird said. But although it will face scrutiny on these issues, analysts do not expect Indonesia to confront any real problems in securing the loans. The real problem, they say, is how it will repay them. The World Bank estimates that by end-1999 public debt will reach ``a staggering 102 percent of GDP -- a fourfold increase from the pre-crisis period.'' Even under optimistic assumptions, it is a burden that could take decades to dismantle. ++++++++++++++++++++++++++++++++++++++++++++++++++++ Didistribusikan tgl. 25 Jul 1999 jam 06:13:45 GMT+1 oleh: Indonesia Daily News Online <[EMAIL PROTECTED]> http://www.Indo-News.com/ ++++++++++++++++++++++++++++++++++++++++++++++++++++
