Fourth LoI could be signed soon: IMF<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
The International Monetary Fund, or IMF, indicated Monday that
\nthe government may be signing its fourth lending agreement with
\nthe organiztion as early as this year.<\/p>\n
The IMF's senior representative for Indonesia, David C.
\nNellor, said the fourth Letter of Intent (LoI) could be signed
\nover the next few days.<\/p>\n
\"I can't give you a precise date, but it won't be too much
\nlonger from now,\" he said. When further pressed, he added, \"sure,
\nit could be this year.\"<\/p>\n
The LoI contains a set of economic reform targets that the
\ngovernment must meet to receive the IMF loans.<\/p>\n
The signing of the fourth LoI would allow the disbursement of
\na US$400 million worth of loan tranche to Indonesia.<\/p>\n
The loans are part of a three-year economic reform program for
\nwhich the IMF holds ready a $5 billion worth aid package.<\/p>\n
However, the disbursements must await the approval of the IMF
\nexecutive board, which will meet after the Lol has been signed.<\/p>\n
Nellor said the IMF executive board may meet early January.<\/p>\n
\"There are two steps we have to see: one, the Letter of Intent
\nwould be signed; step two, the executive board would meet and
\nconsider the review and if the executive board approves the
\nreview then the funds are disbursed straight away,\" he explained.<\/p>\n
Finance Minister Boediono has said earlier that he was hoping
\nto tap the IMF loans this year, on the confidence of securing an
\nLoI deal by mid December.<\/p>\n
The signing of the LoI follows last month's agreement between
\nthe government, and an IMF team on the draft of the LoI.<\/p>\n
One of the LoI drafts, dated Nov. 13, outlines 47 points that
\ncover various areas of reform for the country's economy.<\/p>\n
Among the targets mentioned by the draft is to lower the rate
\nof inflation rate to between 9 to 10 percent from this year's
\nestimated 12 percent.<\/p>\n
This implies Bank Indonesia must keep its interest rates high
\nin order to ease inflationary pressure, thereby reducing the
\nsupply of money in circulation.<\/p>\n
Other targets call for further cuts in fuel subsidy spending,
\nstrengthening the tax administration, and the sale of Bank Niaga
\nby mid-2002.<\/p>\n
The LoI draft also sets a privatization target of Rp 6
\ntrillion (about $576 million) for next year.<\/p>\n
Nellor said the government has nearly met all targets
\ncontained under the third LoI, which was signed last August.<\/p>\n
The third LoI signing followed an eight-month long suspension
\nof the IMF loan program, as it responded to signs the government
\nwas wavering on its reforms commitment.<\/p>\n
A resumption of the program was made possible with the
\nelection of a new government under which groups together a
\ncredible economic team.<\/p>\n
\"We think the government has a sound reforms program in place
\nwhich, if implemented, should see an improvement in the economic
\ncircumstances,\" Nellor said at a press briefing that followed a
\nseminar on privatization by the business consultancy firm,
\nCastleAsia.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fourth-loi-could-be-signed-soon-imf-1447893297",
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"sponsor": "Okusi Associates",
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