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Indonesia Gets $2.5 Billion in Loan Pledges - 2003-01-22

International aid donors are wrapping up a meeting in Bali by pledging more than $2.5 billion in loans to Indonesia. The Indonesian government says it will try to end its reliance on foreign assistance.

The $2.7 billion promised by members of the Consultative Group on Indonesia is in line with expectations and will mostly go to cutting the country's growing budget deficit.

Indonesia had requested slightly less. Additional money was granted despite a government announcement Monday that it is rolling back some economic reforms, which were sparking social unrest.

Austerity measures imposed by the reformers have become increasingly unpopular with ordinary people. Indonesians have taken to the streets in the past few weeks to protest rising fuel and energy costs, after Jakarta cut subsidies.

Indonesia says it hopes to move beyond its reliance on loans from the International Monetary Fund by year's end.

The Minister of Planning, Kwik Kian Gie, told donors that Indonesia plans to tighten measures on tax evasion, and timber and sand smuggling. These areas cost the country $28 billion each year.

The IMF has provided nearly $20 billion in assistance to Indonesia since the Asian financial crisis five years ago. Many analysts credit the IMF with having persuaded Indonesia to make much needed economic reforms in return for the loans.

Although progress in economic reform and curbing corruption has been slow, the country earned credit for advances in other areas, particularly its success in alleviating separatist and religious violence in the northern province of Aceh and in Maluku.

It appears that donors are aware that pushing Indonesia too far too fast on the road to reform might cause instability and therefore be counterproductive.