Banking reform urged: IMF<\/p>\n
Agence France-Presse, Jakarta<\/p>\n
Indonesia has made further progress in implementing its reform
\nprogram but still needs to focus on rebuilding its banking system
\nand restoring investor confidence, the IMF said Monday.<\/p>\n
Monetary prudence, supported by other reforms, contributed to
\ncontinued exchange rate stability, a significant reduction in
\ninflation, and a decline in interest rates, the International
\nMonetary Fund said in a statement.<\/p>\n
The IMF has been coordinating over US$5 billion in foreign aid
\nto help Indonesia recover from the 1997-1998 Asian financial
\ncrisis.<\/p>\n
The fund praised Indonesia's government for bringing the
\nbudget back on track after a temporary setback in the first
\nquarter, while the targeted budget deficit of 2.5 percent of
\ngross domestic product (GDP) appears within reach.<\/p>\n
It said the government's planned 2003 budget is in line with
\nthe medium-term fiscal goals of reducing public debt to a
\nsustainable level.<\/p>\n
At the same time, the IMF said the government needs to
\nreinvigorate several areas of its reform program by focusing on
\nrebuilding the banking system and restoring investor confidence.<\/p>\n
The statement said the IMF mission reached agreement with the
\ngovernment's economic team on policy priorities for the seventh
\nreview of the reform program.<\/p>\n
\"We aim to finalize understandings on a supplementary letter
\nof intent for the review and to present it to the IMF's executive
\nboard as expeditiously as possible,\" it said.<\/p>\n
A successful completion of the review by the IMF board will
\nallow Indonesia to draw a further $360 million.<\/p>\n
IMF said that during the two-week review the visiting team
\ndiscussed the importance of progress in bank divestment and the
\nmerger of government-controlled smaller banks, strengthening the
\nperformance of state banks, and implementing plans for the
\nprivatization of state-owned companies.<\/p>\n
The team said it also discussed the importance of building an
\nattractive investment environment and the need for legal reforms
\nincluding the establishment of the anti-corruption commission and
\nadoption of amendments to the bankruptcy law.<\/p>\n
Opposition to the IMF has been mounting in Indonesia,
\nincluding within the government. Critics say it is setting
\neconomic policy, sometimes to the disadvantage of the nation.<\/p>\n
But in a progress report to legislators recently, President
\nMegawati Soekarnoputri confirmed Indonesia still needs to
\ncooperate with the IMF to restore world confidence in its crisis-
\nhit economy.<\/p>",
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"sponsor": "Okusi Associates",
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