Agency officials fear a "lost generation" of Indonesian pupils could miss out on education altogether because their parents can no longer afford fees, uniforms or books.
The World Bank is paying the lion's share of the five-year programme by moving funds from other, less urgent education projects, with another #163;62m of new loans expected after 2000. A further #163;60m is being lent by the Asian Development Bank.
"You can say that it is a direct crisis response," says Christopher Smith,a World Bank consultant. Australia has donated #163;300,000, and some Indonesians are already offering money via a Jakarta phone hotline.
This week, the government and the United Nations Children's Fund kicked off a public awareness campaign, using local television stars and radio broadcasts to spread the message of the new school year which starts on July 20. Its slogan, printed in bright and breezy letters on leaflets and posters, is "aku anak sekolah" ("I'm a schoolkid").
Inflation is soaring and millions of people have lost their jobs. The scale of the problem in education will not be clear until after term starts, but the World Bank predicts that up to 16 per cent of primary pupils and 11 per cent of children in junior secondary schools could drop out, with next year being worse than this one.
The programme hopes to staunch the flow of drop-outs by targeting the poorest families. Forty per cent of primary schools will be paid block grants of 2m rupiah (#163;90) a year to use on teaching and equipment. Junior secondary schools for 13 to 16-year-olds will get 4m rupiah a year. On top of this, 2.6m secondary pupils will receive scholarship s worth #163;11. The sums involved sound small, but many Indonesians do not even earn the official minimum wage of around 170,000 rupiah or #163;8.50 a month.
To get round Indonesia's cumbersome and often corrupt bureaucracy, pupils and schools will get vouchers which they can cash in at branches of the state-owned Bank Rakyat Indonesia.
There is a risk that cash-strapped parents will simply add the money to the family budget, and consultants working on the programme say this is why the publicity campaign has to stress the importance of basic education to children's futures.
After 32 years of authoritarian rule under President Suharto, who resigned in May, people have become suspicious of grand government schemes.To get around this, schools and their communities will be given a major say in deciding who gets the money.
The campaign has been "decentralised" to the school level so that people will not become disillusioned, says Yoshiteru Uramoto of UNICEF in Jakarta.
The programme has been put together at high speed, and many different interests have to be brought together for it to work. On the Indonesian side there are four government ministries overseeing different parts of the school system, plus local bureaucracies and the schools themselves.
Nonetheless, things seem to have gone smoothly so far. "We've moved incredibly rapidly over the past three weeks and there's been an exceptionally high level of co-operation," says Christopher Smith of the World Bank.