General Statement of the Head of Indonesian Delegation at the Twenty-Fifth Session of the Governing Council

Mr Chairman,
Distinguished Delegates,
Ladies and Gentlemen,

Allow me first of all, on behalf of the Government of Indonesia, to express our sincere appreciation and thanks to the President of IFAD and his staff for their untiring efforts and excellent preparatory work to ensure the success of this important meeting of the Governing Council of IFAD.

At the 1995 World Summit for Social Development, the international community reached a broad consensus that all of us working in the development area should focus their programmes on the goal of reducing poverty. Five years later, at the Millennium Summit, governments committed themselves to reduce by half, by 2015, the proportion of people living in extreme poverty. This global commitment to fight and eradicate poverty carries the commitment of greater resources as well as global support for overall poverty reduction strategies and programmes.

Poverty reduction and the elimination of hunger through agriculture development is IFAD's mission. Today, IFAD is confronted with the new realities of the global economy and ever changing challenges, but at the same time we know that the organization's role has become even more important now to help promote and implement the global campaign to eliminate hunger and poverty. We all agree that highly impoverished countries must be assisted in these efforts. Half of the world's inhabitants live in poverty. Now more than ever, we must work together to eradicate hunger and work towards improving social conditions in rural areas. Only then can we achieve long lasting peace and lead to the establishment of a more just and tolerant society.

In the case of Indonesia, the [...] economic crisis that engulfed the country since 1997 has been worse than anyone had previously envisaged. GDP fell by 13.2% in 1998 following growth rates that had averaged more than 8% during the previous seven years. The banking sector virtually collapsed forcing the Government to recapitalise it at a cost that has already exceeded approximately USD 67 billion. The corporate sector came to a virtual halt due to the restructuring of large amounts of foreign currency debt that was accumulated during the boom years of the early 1990s. At the same time, the country has undergone fundamental political and social changes. Socially, the impact of the financial crisis has been painfully felt with GDP per capital falling to less than USD 700 in 2001 from USD 1.100 in 1997. Many believe that the full impact is yet to be fully seen.

Among the biggest consequences of the economic crisis has been the deterioration of the Government's budget. At a time when more Government spending was needed to help lessen the economic hardships brought about by the crisis on the poor, social expenditures were reduced. Even today, due to the heavy debt burden that the Government must now service, few resources are left to help finance development and poverty reduction programmes. We urgently need the support of the international community to foster and implement programmes to alleviate poverty and hunger in our country. We need assistance in the area of technology transfer, opening market access to our products and exports, micro-finance, infrastructure development and rehabilitation of our forestry industry among many others.

IFAD has extended the Republic of Indonesia 11 loans, for a total amount of USD 243.3 million. The organization's current portfolio of development efforts in the country consist of four on-going projects that have been funded with SDR 66.2 million (equivalent to about USD 59.6 million). One of these projects, already considered a huge success, is the Rural Income Generation Project (RIGP) (Proyek Peningkatan Pendapatan Petani/Nelayan Kecil (P4K). The RIGP is working to alleviate poverty in rural areas by focusing on the development of the agribusiness sector. This particular project aims at strengthening household finances and increasing purchasing power by providing assistance in agribusiness activities.

After the economic crisis, the Government of Indonesia changed the focus of its development programmes from government driven to private sector driven. Meanwhile, IFAD has also been re-shaping its country programme goals. The Fund moved from traditional agricultural development projects, based on the delivery of goods and services, towards more sustainable community development projects, based on the establishment and strengthening of the institutions for the poor that have become the subject of the development process. The last IFAD-funded project --the Post Crisis Program for Participatory Integrated Development in Rainfed Areas (PIDRA) is based on a very innovative partnership between the Government and NGOs. PIDRA has so far been implemented with promising results in terms of increased cost-effectiveness and impact on poverty.

Mr Chairman,

In accordance with the financial commitments pledged to IFAD, the Government of Indonesia has made its first payment of USD 3.5 million. This meeting of the Governing Council is of extreme importance as we embark on a review of the resources available to the Fund and examine the adequacy of these resources to achieve IFAD's goals. We need to reach consensus for the Sixth Replenishment of IFAD's resources as soon as possible during 2002, and this meeting is quite timely as it will provide member countries with sufficient information and time to consider the multi-dimensional effects of their contributions to IFAD. The lack of adequate funding will certainly affect the ability of the Fund to carry out its mandate satisfactorily.

Mr Chairman,

We must continue to work hard to eradicate poverty. We believe that partnership with the other institutions, on both multilateral and bilateral levels, should be explored and pursued to further strengthen the reach of IFAD's goals. Partnerships and collaboration with other donors in attaining the noble and vital goal of eradicating hunger and poverty would make the task easier. Indonesia, for instance, has worked together with the World Bank in several development efforts and poverty eradication programmes. It is encouraging to note that the World Bank, FAO and IFAD are all committed to support agricultural development, especially rural development and poverty alleviation in developing countries.

Thank you very much for your attention.

The Head of the Indonesian Delegation.