Jakarta promised $4.8bn

Jakarta is under pressure to disarm the militias

International aid donors have agreed to give Indonesia $4.8bn next year to help rebuild its economy.

The approval had been widely expected despite widespread criticism over Jakarta's failure to deal with the militias terrorising East and West Timor.

Indonesia is showing signs of economic recovery

The donors, who met in Tokyo, were said to be concerned that refusing aid would jeopardise Indonesia's fragile economic recovery following its battering in the Asian economic crisis of 1997.

The International Monetary Fund (IMF) says Indonesia has made progress on economic reform, but some problems remain.

Reports said a group of aid donors had pledged an additional $530m in technical assistance grants to Indonesia following the Tokyo meeting.

The money will also be used to provide support for Indonesian non-governmental organisations.

Violence

A World Bank report released on Friday said although Indonesia's economy was showing some signs of recovery, financial markets remained unconvinced.

Thousands of East Timorese refugees are unable to return home

"Factors such as political uncertainty, regional unrest and periodic outbursts of violence, combined with policy slippage on the structural reform agenda, could still derail the economic recovery," the report warned.

It added that progress in bringing the pro-Jakarta militias to heel would provide a "positive environment for donor support".

Militias

The militias were behind a campaign of terror surrounding East Timor's vote for independence last year which ended more than two decades of Indonesian rule.

I'm frightened about West Timor

Sadako Ogata, UNHCR

When international peacekeepers arrived in East Timor, the gangs fled into Indonesian West Timor where they continue to operate out of refugee camps near the border.

They have been blamed for a series of attacks on UN peacekeepers in East Timor as well as the murder of three UN refugee workers in West Timor.

The head of the UN refugee agency Sadako Ogata said on Wednesday that the security situation was still too frightening for her staff to return to West Timor.