Poverty Reduction

Feb 13th, 2007, in Business & Economy, by

Indonesia is cashed up, says the World Bank, and should tackle poverty.

World Bank country director Andrew Steer said on the 12th that Indonesia had a windfall of $15 billion, due to its cutting of fuel subsidies in 2005, falling interest payments on its debt, and increasing export and tax revenues. Not since the oil price boom of the mid 1970’s had so much cash been in the government’s hands, said Steer.

Andrew Steer
Andrew Steer.

He advised that Indonesia should now pick up the pace on public spending, especially on infrastructure projects, education, and health to ensure that the nation’s economy would be competitive in the long term. Spending on infrastructure should be increased by 2% of GDP to 5.4%, he said, which would mean an additional $6 billion per annum. After the “lost decade” following the 1997-1998 Asian financial crisis Indonesia had a lot of catching up to do.

There’s nothing to stop rapid progress except political will.

Steer suggested the government focus on building up water and electricity supplies as these were two areas most in need of improvement. Only 40% of Indonesians have access to piped water and a third have no access to electricity. Abolishing the universal electricity tariff would mean that the state power firm PLN had an incentive to expand its network because it could then make money on every new connection, whereas now it cannot.

Steer said some of the additional money is already being well spent, particularly in the education area. He said Indonesia was increasing the reach of its anti-poverty program with another 75,000 villages to be targeted in the next three years.

Another scheme, based on similar programs in Mexico and Brazil, will also give assistance to the poor on the condition that they keep their children in school and provide a proper diet.

These two programs were world class, Steer claimed, and poverty could be on the ropes, at least for some: antara

It will enable the inter-generational transmission of poverty to be broken, at least for some poor people, because at the moment the great tragedy worldwide is that if you’re born into a poor family, you’re going to be poor, so the trick is to break that transmission mechanism.

2 Comments on “Poverty Reduction”

  1. aduh says:

    Ha, ha $15b gone to the government money rather than to the people.

  2. Cukurungan says:

    So why we people have to bother with those debts. If world banks request us to pay just let them get payment from Suharto family and we close the doors forget the debts and we back to flinstone age.

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