Received from Joyo Indonesian News:

Indonesia donor countries praise progress but concerned about East Timor

PARIS, July 27 (AFP) - Indonesia has come a long way both economically and politically since last year, donor countries said Tuesday, but several expressed concern about the situation in East Timor at an annual meeting here.

The US delegation went so far as to warn that a "failure to deliver on its responsibilities in East Timor" by the Jakarta government could "complicate the ability of the United States to provide the assistance flows necessary to early economic recovery."

Indonesian Economy and Finance Minister Ginanjar Kartasasmita told reporters he did not see this as a "threat" to halt aid, but rather as an "expression of concern."

Nonetheless, after other donor countries had also voiced worries about continuing violence in East Timor ahead of a planned referendum on self-determination next month, Indonesia took the unusual step of issuing a written response during the first day of the two-day donor meeting.

It stressed that the government is "determined to continue to ensure that the popular consultation will be held peacefully and in an orderly manner" despite some difficulties, and urged donors to "be assured that your concern is also ours."

Donor countries and the World Bank, which is hosting the donor meeting, also stressed the advances made by Indonesia in the past year both on the economic front and politically.

World Bank managing director Sven Sandstrom described last month's elections, the first democratic polls in four decades, as "one of the most remarkable accomplishments yet."

"What a difference a year makes," Sandstrom told the gathering of almost 30 donor countries and international organisations at the World Bank offices to agree aid for the coming year. The meeting is due to end Wednesday.

Indonesia is seeking 5.5-6.0 billion dollars to meet its budget needs this year, down from pledges last year of 7.9 billion dollars, some 6.2 billion of which was actually disbursed, according to World Bank figures.

Last year's meeting was held in an atmosphere of "doom and gloom" but now "the economy has stabilised and the social impacts of the crisis, while severe, are not as catastrophic and all-embracing as we had feared," Sandstrom said.

But, he warned, "we must not become complacent.... Bank and corporate restructuring is still far from complete" and reforms aimed at rebuilding confidence and combatting corruption "are likely to take years to implement fully."

Ginanjar Kartasasmita said that the economy is "on the road to recovery .... the economy has stabilised," with growth now seen at 1.5 to 2.5 percent this year, and inflation at five percent by the end of the year.

But he warned that stability "is still very fragile."

"We cannot afford to lose time.... A smooth transition from the outgoing to the incoming government will be crucial," Ginanjar told the donor meeting.

"We ask you not only to give your pledge for this fiscal year but also an indication of support for the next fiscal year."

"If we leave any doubt in the investors' minds about the financial viability of Indonesia's plans during the transition, the hard-gained and fragile stability could wither," Ginanjar said.

A number of non-government groups and human rights organisations had said the donor meeting should be postponed until a new government is in place.

But the process has proved lengthy, with 27 small political parties still refusing to sign off on the results.

Sandstrom said it was important to hold the donor meeting as planned "to maintain the momentum of the reform programme and ensure political support during a period of political uncertainty."

A second meeting will be held in January to enable the donor countries to meet the new government, and Sandstrom moved to further calm the concerns of non-government groups on Tuesday, saying that they might be invited to join that session as well as taking part in preparations for the meeting.

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