Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point

In Depth

On Air

Archive
Feedback
Low Graphics
Help

Wednesday, July 28, 1999 Published at 13:26 GMT 14:26 UK


Business: The Economy

Indonesia gets $5.9bn aid package

People queued for rice as the crisis hit

Indonesia's economy is to receive a boost as foreign donors have pledged $5.9bn to help rebuild the country.

Indonesia has suffered more than most from the effects of the Asian crisis, with the government estimating that half the population now live in poverty.


[ image: Many people are facing poverty]
Many people are facing poverty
It is also struggling to make the transition to democracy, with the results of the first free election still to be finally confirmed.

The World Bank is coordinating the aid package, with Japan the largest single donor, pledging $1.57bn.

"The government of Japan asked the government of Indonesia to maintain its current attempt at political and economic reform, in particular the promotion of more democratic and fair 'good governance' as well as to implement projects in (an) effective and transparent manner," said Karuo Shimazaki, Japan's representative at the Paris meeting.

Political instability

The Indonesian economy declined by more than 8% last year, while the value of the rupiah plunged by more than 80% on foreign currency markets, increasing the cost of foreign imports like rice.

That has sparked political and religious unrest, with riots between Muslims and Christians, and demands by separatists for independence in several regions.

Another problem is corruption. Although Indonesia is rich in natural resources, many companies were controlled by relatives of the previous Suharto government who operated them for personal gain.

The aid will help the new government overcome its budget deficit and provide a boost in the drive to restructure the economy and provide social support.

But it will be a long time before private sector confidence returns to Indonesia, and the large foreign investments of the past may be harder to restore.

Aid groups had urged a suspension of any foreign assistance until after Indonesia had carried out its pledge to hold a referundum in East Timor on independence.





Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents


Relevant Stories

01 Jul 99 | The Economy
Asia's crisis: The country breakdown

08 Jun 99 | The Economy
Markets welcome Indonesian election





Internet Links


World Bank


The BBC is not responsible for the content of external internet sites.




In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree