Government, IMF 'agree' on central bank issue<\/p>\n
JAKARTA (JP): The government and the International Monetary
\nFund "have bridged their differences" over the controversial
\namendment of the central bank law, Coordinating Minister for the
\nEconomy Rizal Ramli said on Monday.<\/p>\n
Rizal said that the government and the IMF had agreed to form
\na panel of experts consisting of two former central bank top
\nofficials from Canada and Brazil and two from Indonesia to review
\nand provide input to the government-proposed bill on the
\namendment of the existing central bank law.<\/p>\n
"Fischer and I had some very good discussions regarding the
\nproposed amendments to the central bank law and we are in full
\nagreement regarding the need to ensure that Bank Indonesia
\nmaintains its independence while efforts are made to make it more
\naccountable ... We also agreed to steps that will be taken to
\naddress the concerns of the IMF regarding those amendments while
\nalso ensuring that the review of the IMF program moves forward in
\na timely manner," Rizal said in a press statement.<\/p>\n
Last week, Rizal met with IMF first deputy managing director
\nStanley Fischer in Washington in a bid to fix worsening relations
\nwith the Fund.<\/p>\n
The amendment of the central bank law had been a factor
\nprompting the IMF in December to delay the disbursement of its
\nnext US$400 million loan to Indonesia.<\/p>\n
The House of Representatives had delayed the deliberation
\nprocess of the proposed bill on the amendment of the central bank
\nlaw until March 12.<\/p>\n
The IMF had earlier expressed concern that the amendment
\nprocess would threaten the independence of Bank Indonesia, but
\nthe government had insisted that it was needed to boost the
\naccountability of Bank Indonesia particularly following massive
\nmismanagement and corrupt practices in the past.<\/p>\n
Rizal, however, could not confirm when the Fund would release
\nits loan. The IMF loan is seen as a key factor to help revive
\ninvestor confidence in the ailing economy. Other assistance
\npromised by other multilateral institutions would also depend on
\nthe release of the IMF money.<\/p>\n
Rizal said that the government was "finalizing the dates for
\nthe timely visit" of the IMF mission to jointly prepare the
\ncountry's next letter of intent (LOI).<\/p>\n
The LOI basically contains a list of various economic reform
\nprograms to be implemented by the government. The IMF would only
\ndisburse its loan after the Fund's board of directors approve the
\nLOI.<\/p>\n
Elsewhere, Rizal said that the government had basically
\nimplemented the key reform programs promised under the previous
\nLOI to the IMF.<\/p>\n
He pointed out that the Indonesian Bank Restructuring Agency
\n(IBRA) had raised more than Rp 20 trillion in proceeds from the
\nsale of banking assets, which was more than the Rp 18.9 trillion
\ntarget set for 2000.<\/p>\n
The Jakarta Initiative Task Force has also managed to help
\nrestructure around US$9 billion worth of private sector overseas
\ndebt last year compared to the target of $8 billion, he said.<\/p>\n
"In general, the IMF has recognized that we have achieved many
\nof the programs mentioned in the (previous) LOI. If there is a
\ndifference, it is related to the change of the (political)
\nenvironment in Indonesia," Rizal said in a brief press
\nconference.<\/p>\n
He explained that under the current democratic environment,
\nthe government could not move quickly enough in the
\nimplementation of its economic programs because in some cases it
\nis obliged to first seek the approval of the legislature.<\/p>\n
He pointed out as an example the planned sale of government
\nownership in Bank Central Asia (BCA) and Bank Niaga.<\/p>\n
The divestment was supposed to be completed late last year,
\nbut was delayed after the government failed to obtain approval by
\nthe legislature. The IMF was deeply disappointed by the delay.<\/p>\n
"The legislature is no longer a rubber stamp legislature as it
\nwas in the past," Rizal said.<\/p>\n
Elsewhere, Rizal said that he had convinced the IMF on the
\nneed to replace the existing Bank Indonesia board of governors in
\na bid to help create a credible central bank.<\/p>\n
He said that the image of Bank Indonesia had been tarnished by
\nmismanagement and corrupt practices in the past.<\/p>\n
Rizal also said that in a meeting with U.S. Treasury Secretary
\nPaul O'Neill, the U.S. government had promised to continue to
\nsupport Indonesia while it is in a process of transition toward
\ndemocracy.(rei)<\/p>",
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