ADB approves US$500 million loan for disaster recovery in Indonesia

ADB approves US$500 million loan for disaster recovery in Indonesia

President of the Asian Development Bank (ADB) Takehiko Nakao met with the President of the Republic of Indonesia Joko Widodo to offer disaster relief funds in Central Sulawesi. (Hanni Sofia)

Jakarta  (ANTARA News) - The Asian Development Bank (ADB) has approved US$500 million emergency assistance loan to support Indonesia`s recovery and rehabilitation of Lombok and Palu after recent disasters claimed thousands of lives and destroyed infrastructure.

"ADB`s emergency assistance loan provides timely and flexible financing to help mitigate the devastating impacts of the recent disasters," ADB`s Director for Public Management, Financial Sector, and Trade Division for Southeast Asia Sona Shrestha noted in a statement here on Tuesday.

The loan will provide immediate funding for the government`s recovery and rehabilitation action plans, targeting urgent needs, such as temporary shelters, social protection and social services, as well as economic recovery through cash assistance, credit schemes, and skills improvement programs.

"The quick-disbursing loan modality will help ensure that post-disaster recovery and rehabilitation expenditures are met without compromising critical economic and social development expenditures in the national budget," Shrestha remarked.

The loan, named Emergency Assistance for Recovery and Rehabilitation from Recent Disasters, is part of ADB`s response to two recent disasters that hit Indonesia, including a magnitude-7.0 earthquake that struck Lombok, West Nusa Tenggara Province, in August and a magnitude-7.4 earthquake that hit Central Sulawesi Province in September.

The disasters claimed the lives of more than 2,600 people, injured some 18 thousand people, and displaced more than half a million. Housing and public infrastructure have suffered extensive damage.

The impact of the Central Sulawesi disaster has been particularly severe, as the earthquake caused landslides, tsunami, and liquefaction, a condition where the ground itself loses stability and takes on liquid properties.

Initial assessments suggest over US$2.2 billion in damage and losses in the affected provinces.

In addition to physical damage, the disasters will have a severe impact on the livelihoods of affected people.

ADB Public Management Specialist Robert Boothe projected growth in both provinces to fall by more than half, employment opportunities to shrink, and poverty incidence is projected to rapidly increase as a result of the disasters.

"ADB`s support will help the government mitigate these effects, especially for women, the elderly, and vulnerable groups," he noted.

In October, the ADB approved an emergency grant of US$3 million from the Asia Pacific Disaster Response Fund for immediate relief works in Central Sulawesi.

In addition, ADB has supported the government through offering technical assistance in assessment of post-disaster needs and reconstruction planning and preparing emergency assistance project loan of up to US$500 million to support the reconstruction of critical infrastructure in the medium term in affected areas.

The ADB is also preparing new technical assistance to build capacity for robust monitoring, evaluation, and financial reporting of the rehabilitation and reconstruction plans.

Reporting by Satyagraha
Editing by Sri Hariyati