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Dow Jones Newswires, September 12, 2000

World Bank Denies Withholding Indonesia Loans Over W Timor

JAKARTA --The World Bank denied Tuesday it plans to withhold
loans from Indonesia if the country doesn't make greater efforts
to stop the violence in West Timor.

Mark Baird, the bank's chief representative in Indonesia,
confirmed World Bank President James Wolfensohn has sent a
letter to Indonesian President Abdurrahman Wahid urging a quick
solution to the violence, which left three U.N. workers dead
last week.

But Baird added there was no question of pulling financial
assistance from the country, contrary to a Washington Post
report Tuesday that said continued financial support to the
Southeast Asian nation may be linked to the success
of efforts to quell pro-Indonesian militia groups in West Timor.

"There is no mention in Wolfensohn's letter of loans being
withheld from Indonesia," Baird told Dow Jones Newswires.

Letter Mentions W Timor Violence

In his letter, Wolfensohnn did stress, however, that increased
efforts to stop the violence would help Indonesia when it meets
with major donor organizations, including the World Bank, in
Tokyo in October to negotiate over a new round of loans for the
embattled economy.

"I look forward to being able to report to donors at next
month's Consultative Group meeting that the violence has ended,
that the United Nations has been able to resume its humanitarian
activities, and that those who want to return home to East Timor
are now being allowed to do so in safety," Wolfensohn told Wahid
in the letter.

The killing of U.N. relief workers in West Timor last week by
pro-Indonesian militia is the latest blow to Indonesia's
international standing.

Timor island, the eastern half of which won independence from
Indonesia in a referendum last year, has been racked by
sectarian violence in the past year. Other parts of the
sprawling archipelago have also exploded in violence,
often due to inter-community rivalry.

Efforts to reduce the violence would help Indonesia to attract
more foreign loans to finance a budget deficit set to total
around 4% of gross domestic product this year, Baird said.

The nation's public debt already totals about $135 billion, with
some $70 billion of this coming from foreign lenders.

"Concrete action on the West Timor problem would facilitate a
positive outcome at the upcoming Consultative Group meeting,"
Baird said.

Indonesian stocks fell 2.5% Tuesday, with traders citing
concerns the World Bank might hold back loans. The rupiah also
fell through its support at IDR8,500 to the dollar after trading
above that level for most of the day.

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Didistribusikan tgl. 18 Sep 2000 jam 05:41:48 GMT+1
oleh: Indonesia Daily News Online <[EMAIL PROTECTED]>
http://www.Indo-News.com/
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