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Donors Pledge Financial Support for Indonesian Earthquake Recovery


A group of international organizations are pledging support for Indonesia's earthquake recovery efforts, during an annual gathering of donors in Jakarta. The price tag for reconstruction has been estimated at more than $3 billion, a figure six times larger than previous reports.

Donors in the Consultative Group on Indonesia, known as CGI, have offered $3.9 billion in loans and grants, which will be used to bolster the state budget. Another $1.5 billion will be used to repair extensive damage in Central Java's earthquake zone.

The Asia Development Bank says it will provide up to two billion dollars in new loans to Indonesia for reconstruction during the next two years. Loan amounts from other donors have yet to be finalized, but Bank representatives said the preliminary figures should serve as a measure of confidence in the country's debt management and potential for growth.

The World Bank has indicated a loan of more than $800 million may be issued for 2006.

The World Bank's country director for Indonesia, Andrew Steer, says the government is demonstrating good fiscal judgment and has been able to gain income from development loans in the past.

"And the good thing about Indonesia today is that it is positioned in a macro-economic position well enough so that it can, for the first time since the crisis, really grow," he said.

The World Bank estimates nearly 200,000 homes were destroyed in the May 27 earthquake.

The government is still calculating damage estimates, but a government report released earlier this week puts the cost at more than $3 billion. That is significantly higher than the recovery cost for areas damaged by the Indiana Ocean tsunami in late 2004.

Officials point to the higher number of damaged buildings, many of them poorly constructed, and a higher population density to help explain the disparity.

Steer says another concern of donors is the potential for an avian flu outbreak. He says additional funds are available to help the country with a prevention program.

"But as of today, there is not a clear detailed plan that needs to be financed. And so ... we are expecting in the coming month or two that a clear financable plan would be concluded, and then there is quite a bit of funding that is waiting to finance that plan," he added.

During the Consultative Group on Indonesia meeting, the country's vice president, Jusef Kalla, also called for the 32 CGI members and other earthquake donors to hasten their contributions to avoid drawing out the reconstruction in Yogyakarta.

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