Govt determined to part with IMF: Hamzah<\/p>\n
Fitri Wulandari
\nThe Jakarta Post
\nJakarta<\/p>\n
The government is determined not to extend its agreement with the
\nInternational Monetary Fund (IMF), due to end this year, Vice
\nPresident Hamzah Haz said on Friday.<\/p>\n
"The government is determined to end the IMF (agreement). But
\nwe have to prepare ourselves for that. It means we have to tap
\ndomestic resources," Hamzah said after Friday prayers at Al Falah
\nMosque, Tangerang, Banten.<\/p>\n
Hamzah added that if the government wished to extend the
\nagreement, then it would have to be discussed with the People's
\nConsultative Assembly (MPR), as the MPR annual session last year
\nhad clearly ordered termination of the IMF program.<\/p>\n
Hamzah's comment is the first official statement regarding the
\nissue of IMF program termination.<\/p>\n
The Vice President recognized that ending the IMF program
\nwould mean that Indonesia would have to repay about US$6 billion
\nto $7 billion in outstanding debt to the IMF.<\/p>\n
Indonesia's foreign exchange reserves stood at US$33.6 billion
\nas of the end of April.<\/p>\n
Hamzah also expressed his confidence that, without the IMF,
\nIndonesia's fiscal status and balance of payments would remain
\nsafe, provided that the domestic security situation remained
\nstable and exports increased.<\/p>\n
"The problem in Aceh should be resolved quickly so as not to
\nbecome a burden. The banking sector should start extending
\ncredits to improve the real sector," he was quoted as saying by
\ndetik.com Internet news portal.<\/p>\n
The government plans to launch a military operation in Aceh to
\nquell a separatist movement in the restive, resource-rich
\nprovince.<\/p>\n
Meanwhile, analysts said military operations in Aceh would
\ncreate new security uncertainties, possibly increasing next year,
\nat the very time the country would be participating in
\nlegislative elections and the first-ever, direct presidential
\nelection.<\/p>\n
With such increasing uncertainty, a number of economists have
\nsuggested that the government extend the IMF program, at least to
\nmaintain creditor confidence in Indonesia.<\/p>\n
Economist Fauzi Ichsan from Standard Chartered Bank said that
\nonce the IMF exited from the country, the international community
\nwould question Indonesia's seriousness in carrying out its own
\nstructural economic reform programs.<\/p>\n
"At present, international creditors and investors still have
\nthe confidence that Indonesia can carry out its economic reforms
\nbecause the IMF is watching the process," Fauzi told The Jakarta
\nPost.<\/p>\n
Economist Pande Radja Silalahi, from the Centre for Strategic
\nand International Studies (CSIS), said he doubted that the
\ngovernment would seriously implement structural economic reforms
\nonce it terminated the IMF program.<\/p>\n
He argued that even during the IMF's five-year "tutelage", the
\ngovernment had dragged its feet when it came to implementing the
\nstructural economic reforms set out in the government's letter of
\nintent to the IMF.<\/p>\n
"If the government had been serious in carrying out economic
\nreforms in the past, we would have 'graduated' from the IMF
\nsooner and not be dragging on like this, a situation that is
\ncosting us dear," Pande said.<\/p>\n
IMF loans to the country are tied to the government's
\ncommitment to implementing economic reforms.<\/p>",
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