World Bank Lambastes Self on Indonesia

In a scathingly self-critical report, the World Bank acknowledges that its aid program for Indonesia during the rule of former President Suharto suffered from a failure to address the country’s deep-seated corruption and problem-plagued banking system.

The report, which was written by the World Bank’s independent Operations Evaluation Department, concludes that bank officials overlooked warning signs of Indonesia’s impending financial crisis because they were blinded by the rapid growth the country achieved during Suharto’s 33-year reign.

The report marks a major embarrassment for the World Bank, which for years praised Indonesia as one of the world’s “star pupils” of economic development and cited the country’s success as evidence that the bank’s loans could play a key role in lifting nations out of poverty.

“While the government’s development strategy has had remarkably positive results, issues of poor governance, social stress and a weak financial sector were not addressed and contributed to the depth of the crisis,” said the authors of the report, which was first disclosed by Agence France-Presse.