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World Bank Urges Indonesia to Implement Reforms - 2001-11-05

The World Bank is urging the Indonesian government to implement key reforms to help save its battered economy, which is now in its fourth year of crisis. The World Bank issued a gloomy report Monday ahead of an important international lenders meeting later this week.

World Bank officials say the battered Indonesian economy has been slowing since the beginning of the year and the new government has not done enough to address crucial economic issues. The bank's lead economist in Jakarta, Vikram Nehru, says President Megawati Sukarnoputri's administration has been just muddling through since taking office in July. "I think in the hundred days in office, there really hasn't been that much progress in structural reforms and other reforms that are essential for this economy to gain strength and for poverty to decline," he said. The World Bank issued a report Monday, warning that the September 11 terrorist attacks on the United States and the current war on terrorist targets will only put more strain on Indonesia's economy, which is already struggling with massive debt and endemic corruption.

The report was prepared ahead this week's meeting of the Consultative Group on Indonesia, a group of international donors which meet in Jakarta to consider whether to grant Jakarta at least $3 billion in loans. World Bank economist Vikram Nehru told reporters in Jakarta Monday that even though the Indonesian economy is expected to have a growth rate of more than three percent in 2001, it is far below the nearly five percent growth of the previous year. "It is a cause for concern because Indonesia's starting position is very weak," he said. "For the last four years its growth rate has languished behind those of countries in the region, so it has a lot of catching up to do. And secondly it has a very large share of the population that is either poor or vulnerable to poverty." The World Bank report urges the government to push ahead with plans to privatize bankrupt state enterprises and to reform the banking sector - a key means of attracting desperately needed foreign investment.