JAKARTA, May 11, Reuter - Rich nations disapproving of political oppression in the developing world would rather give aid to governments that do not suppress criticism, the head of a powerful group of donors to Indonesia said on Saturday.

"Many donor agencies are becoming very critical of developing countries when they don't allow a discussion domestically and that does have consequences for development aid," said Jan Pronk, chairman of the Inter-Governmental Group on Indonesia (IGGI) donors' club.

Senior Indonesian Security Minister Sudomo this week justified a 17,000-person blacklist, forbidding dissidents from leaving the country, by saying that if they criticised the government abroad Indonesia might lose development aid.

Pronk, also Dutch minister for development cooperation, pointed to the flood of funds to Eastern Europe which began as citizens raised their voices against their governments.

"The volume and quality of assistance is not going down due to critical statements...but is getting a boost," he told reporters.

Non-government groups who say Jakarta sometimes sacrifices the welfare of poor people for the sake of grandiose development plans complain they have no voice and the strictly controlled press rarely puts their point of view.

Pronk, in Indonesia for talks with ministers and aid agencies ahead of an IGGI meeting, said he would stress the need for development programmes that involved ordinary people at all levels.

The 21-member group will meet in June to agree on aid to the country for the current financial year which ends next March.

"The next stage of poverty reduction will require policies not from the top down but from the bottom up," Pronk said. Such policies would include allowing workers more freedom to try to improve life in one of the world's lowest-paying nations.

Indonesia, a model borrower which always pays its debts on time and in return gets renewed grants new of low-cost loans from the IGGI each year, may have to pull in its belt, Pronk said.

The country worried needlessly about Eastern Europe getting some of its aid last year but the post-Gulf War Middle East was a more serious competitor, he said.

"A number of developing countries including Indonesia will have to plan on the basis...that the flow of financial resources will not increase any more."

The IGGI groups 13 countries, overwhelmingly dominated by Japan in terms of volume of aid, and eight multilateral donors. In the year to March 31 1991 the group committed a total of 5.8 billion dollars to Indonesia.