Contacts: In Washington: Mohamad Al-Arief (202) 458 5964 malarief@worldbank.org; In Jakarta: Prabha Chandran 62 2152998034 malarief@worldbank.org WASHINGTON and JAKARTA, December 19, 2006 - The World Bank Board today approved US$600 million in development program assistance to the Government of Indonesia as it deepens reforms in four main areas: macroeconomic stability and creditworthiness, public financial management and governance, the investment climate, and services for the poor. The program brings together the Asian Development Bank, the Government of Japan, and the World Bank on a common platform to support Indonesia’s reform agenda. “Indonesia has shown strong commitment to restoring sound economic fundamentals. The challenge now is to encourage investment that will spur growth and create jobs to ensure the needs of the most vulnerable are being adequately addressed,” said Andrew Steer, the World Bank’s Country Director for Indonesia. “The Government’s decision last year to reallocate US$1.5 billion in fuel subsidies to programs that benefit the poor was an extremely positive step.” As part of this year’s development program assistance, the Bank supported independent evaluations of these programs to improve targeting, methodology, and delivery mechanisms. “The efforts have laid the groundwork for an expanded program to improve pro-poor service delivery, including improving teacher performance and supporting the Government’s expansion of community driven programs nationwide.” The reforms have produced tangible results, says William Wallace, Lead Economist of the World Bank in Indonesia: “Growth is accelerating, the financial sector is diversifying, red tape that impedes businesses is being cut, credit ratings are improving and infrastructure projects are getting underway. Investigations and prosecutions of corruption cases continue apace, civil service reforms are starting and the framework for decentralization continues to improve. We hope this momentum will continue.” “This program of development assistance puts the Government in the lead in deciding what works best for the country,” explains P.S. Srinivas, the Manager of the four-year development assistance program. “The World Bank and its development partners play a supporting role in providing advice based on lessons learned, analytic work, and international best practice.” The US$600 million in program assistance (also known as Development Policy Support) comprises of a US$530 million loan and $70 million in concessional credit, which carries significantly lower interest rates and longer maturity than private financial markets, allowing Indonesia to save in total debt service payment over the life of the loan and credit. ### |
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