World Bank okays Indonesia loan
ASSOCIATED PRESS
WASHINGTON, June 2 -The World Bank's executive
board approved a $225 million rural poverty reduction
loan for Indonesia Tuesday but did not act on a $1
billion bank credit to help shore up the troubled
nation's economy.
BOTH LOANS had been scheduled for approval by the
bank's board on May 19 but were halted as escalating civil
unrest that culminated in President Suharto's resignation
forced the World Bank and the International Monetary Fund to
evacuate staff and suspend operations in Jakarta, the capital.
As for the $1 billion loan, Graham Barrett, a spokesman
for the bank's East Asia operations, said, "We need to take into
account the events of the last several weeks before we close off
on the loan and submit it to the board."
Barrett did not indicate when that will be. However, he
said the loan is tied to an agreement by the International
Monetary Fund and Indonesian authorities on another
economic rescue package, the fourth since financial turmoil
erupted in Asia last summer.
Because of the steep decline in the country's currency, the
rupiah, some economic objectives in previous IMF programs
must be revised.
Plans for release this week of a $1 billion IMF credit that
is part of Indonesia's previous $43 billion IMF rescue package
were put on hold after civil unrest erupted last month. It has
subsided since Vice President B.J. Habibie replaced Suharto as
president.
Iwan Jaya Azis, an Indonesian economist who advises the
World Bank, said at an economic conference Tuesday that he
expected the latest IMF review to be completed within the next
few weeks. He said he expected the IMF to be more flexible in
its requirements, such as removing government price subsidies
on fuel and food.
The approved poverty reduction loan is designed to
provide direct help to 7 to 10 million rural Indonesians by
strengthening district and village governments so they can
build roads, provide water supplies, and rehabilitate schools
and health clinics. |
