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Thursday, June 10, 2010

World Bank add loan to Indonesia US$750 million

BI/keuangan
10/6/2010

Irvin Avriano A.

World Bank add loan to Indonesia US$750 million

JAKARTA: Board of Executive Directors of the World Bank approved a new debt to Indonesia worth US$750 million, or equivalent to IDR6.93 trillion.

The investment is devoted to help the program of PT Perusahaan Listrik Negara (PLN/state owned electric-power company), education, and local government programs.

"The investment is designed to help enhance and improve the Indonesian Government programs sustainable," said World Bank Country Director for Indonesia Joachim von Amsberg in their official website yesterday.

According to him, in an era of global economy filled with uncertainty, new investments is a proof of confidence and support of the organization to Indonesia.

"We are very proud to support critical investment programs of the Government of Indonesia and PLN."

From those amount, the World Bank provides additional funding worth of US$ 30 million to support the efforts of PLN as the national power company to strengthening the management capabilities with the launch of enterprise resource planning (ERP).

ERP is an integrated information technology systems and expected to help to restore and to improve human resource management systems, materials, and financial management of PLN.

Newly approved projects are meant for PLN's operations in Sumatra and Sulawesi, which is an extension of ERP system has been launched by the previous success in business unit of PLN in Java and Bali.

The ERP system in Java-Bali has been standardizing PLN business processes, making it more transparent and improve internal controls.

The World Bank has also approved an additional loan assistance in the education sector amounted to US$500 million to help the funding and implement the Biaya Operasional Sekolah-Perbaikan Pengetahuan untuk Transparansi dan Akuntabilitas (BOS-KITA/School Operating Costs-Knowledge Improvement for Transparency and Accountability).

The program was designed to strengthen school-based management and community participation that are expected to improve the quality of expenditure on education in Indonesia.

BOS-KITA is a program that went from the earlier success of the BOS program, the government program to improve the quality of education for all children aged 7 to 15 years. The new loan funding made the total World Bank funding for BOS-KITA amounted to US$1.1 billion.

From those total loans, the World Bank also provided a new loan worth US$220 million to improve local government accountability in the use of the Dana Alokasi Khusus (DAK/Special Fund Allocation).

DAK grants from the state budget and generally used to support areas that do not have sufficient financial capacity to provide physical infrastructure for the delivery of basic public services.

In the year 2010 the total allocation of DAK reached IDR21.13 billion or as much as 2% of the national budget. This project will pay back the grant funds that are now used to fund DAK infrastructure (roads, water, sanitation, and irrigation) based on physical results submitted by participating local governments that have been reported and verified first.

Badan Pengawasan Keuangan dan Pembangunan (BPKP/Financial and Development Supervisory Agency) is assigned to verify the results of this development. Local governments that are eligible to take part in the project areas reached 81 province.

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