DEVELOPMENT-INDONESIA: Jakarta Gets More Aid, but More Conditions Too

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Oct 18 2000 (IPS) - International donors wrapped up an aid conference to Indonesia on Wednesday by giving the country 4.8 billion U.S. dollars, a figure that meets the original request of the Jakarta government.

“There was a new sense of optimism from the donor community on Indonesia’s economic performance and these resources will be adequate to finance the budget and our development programmes,” commented Rizal Ramli, coordinating minister of economic affairs of the Indonesian government.

In addition to the loan package, the Consultative Group on Indonesia (CIG), headed by the World Bank and including roughly 30 foreign donor governments, also pledged another 530 million dollars for technical grants and support for Indonesian non-governmental organisations.

Minister for Settlements Erna Witoelar said the aid will be used for supporting programmes for poverty reduction, such as community development, refugee rehabilitation and education.

“The pledge is most welcome and will play a major role in development in these sectors,” said Witoelat, who is also known as an NGO organiser.

The latest aid package also comes with several conditions attached, in a move seen as a measure to control Indonesia’s other woes like corruption and environmental concerns.

The lending community stressed the importance of structural reforms as outlined by the International Monetary Fund, the clear articulation of poverty reduction strategy and implementation of good governance programme that covered judicial reforms, decentralisation and forest management.

These clearly stated conditions from donors were mostly welcomed by observers and activists.

“What is different at this time’s aid meeting is that poverty reduction has become mainstream in development and economic growth,” said Mark Baird of the World Bank. “Earlier this issue came under safety nets.”

Indonesia was also given an ultimatum of one month to present a detailed action plan on urgent forestry issues and to jointly review progress on its implementation in April 2001.

Five grassroots organisations, including the Indonesia-based International NGO Forum on Indonesian Development, (INFID), participated in the meeting.

Hapsoro of Telapak Indonesia, which works for a ban on illegal logging in Indonesia, welcomed the setting of conditions for rapid progress on this issue in the latest donor meeting.

Hapsoro says said all efforts to curb illegal logging through the Indonesian government has not worked.

The activists presented evidence that showed the logging of ramin, an expensive hardwood, going on even in national parks.

Japan is the fourth largest importer of ramin from Indonesia. “Through illegal logging, the Indonesian government is loosing hundreds of millions of dollars, but nothing has been done because the trade is controlled by timbre barons who have close contacts with the corrupt military,” Hapsor argued.

While activists commended the increased participation of NGOs at the high-level donor meeting and clear wording that called for the involvement of grassroots action in the use of Indonesia’s aid, they voiced disappointment that there was no specific call in the aid package discussions for a better human rights record in the country.

An NGO demonstration outside the conference venue on Tuesday demanded that the CGI not extend aid to Indonesia until the government shows a better human rights record by reining in the military and clamping down on sectarian violence in many parts of the country.

Some donor representatives however said the issue of tackling the role of the military in politics was not discussed at the meeting.

Activists also tried to lobby for a 30 percent reduction in Indonesia’s debt burden, which eats up a big part of its budgetary resources and soared to 75 billion dollars after the loans it got in the wake of the Asian crisis in 1997.

Ramli, himself, notes that that the latest aid package is comprised of loans and will “add to Indonesia’s debt burden, and thus will only be drawn upon if absolutely necessary”.

The Indonesian government wants to reduce its debt service ratio from 86 percent of GDP in 2001 to 65 percent in 2003.

The World Bank, reported however that soft concessional loans, which became available to Indonesia in 1998 after the economic crisis, will be extended to 1.2 billion dollars after a three-year review period from the current 2 million dollars.

Economist Keiji Omura from the Institute of Developing Economies summed up the conference as a step forward for Indonesia. In the end, he said, the point is “the country is desperately in need of foreign assistance.”