ADB to channel $50m for RI infrastructure

The Jakarta Post , Jakarta | Sat, 10/04/2008 11:34 AM | Business

The Asian Development Bank (ADB) will provide a US$50 million loan to support Indonesia's efforts to cut rural poverty.

The 32-year loan will be used to repair and expand infrastructure services, including water and sanitation, health, education and transport, according to the Manila-based bank in a statement Friday.

This represents 80 percent of the estimated $62.5 million for rural infrastructure support being channeled through the PNPM Mandiri project. The government and project beneficiaries will fund the balance of about $12.5 million.

The project will rehabilitate and expand rural infrastructure services in about 1,650 villages in the provinces of Jambi, Lampung, Riau and South Sumatra, benefiting about 2 million people, or about 400,000 households.

About two-thirds of Indonesia's poor live in rural areas.

Recent surges in global food and fuel prices, which have had a disproportionate effect on rural communities, threaten to drive even more people into extreme poverty, according to ADB.

While poverty levels receded after surging during the Asian financial crisis of 1997 to 1998, the country's poverty rate is still over 15 percent, putting it at risk of missing a key Millennium Development Goal, which is to lower the poverty rate to 7.6 percent by 2015.

In order to cut poverty and help meet its Millennium Goals, the government launched the National Program for Community Empowerment, or PNPM Mandiri, last year, which provides funds directly to poor rural communities for infrastructure and other development needs.

The project is expected to start in the first quarter of 2009, and finish by the end of 2010.