The destruction of Indonesia's huge tropical forests, valued by environmentalists as the lungs of the world, is putting the country's economy at risk, the World Bank says. In a confidential report on the environment, the bank says deforestation is costing Jakarta a fortune and must be curbed. It says Indonesia has to develop its natural resources at a rate that can be sustained into the future.

``Indonesia is at a turning point,'' the report says. ``Resources such as forests, land, and water are now becoming scarce and must be managed more effectively if the benefits derived from such resources are to be sustained.''

The bank estimates current destruction at 2.5 million acres a year, or one percent of the country's forest cover.

But the bank also says prospects for sound environmental management are good. Indonesia has already set aside 10 percent of its land for conservation - a higher proportion than almost any other country.

Indonesia, a giant archipelago with a land area about the same as western Europe, has the world's richest forest in terms of commercial production and one of its largest varieties of wildlife and plants.

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