Government reform target ready for IMF review<\/p>\n
JAKARTA (JP): All economic reform targets stated in the latest
\nLetter of Intent (LoI), which has been agreed by the
\nInternational Monetary Fund (IMF), have basically been completed,
\naccording to a senior government official.<\/p>\n
Assistant to the coordinating minister for the economy, Dipo
\nAlam said on Friday that he was optimistic that all the reform
\nprograms would be ready for the Fund's review before the end of
\nthis month.<\/p>\n
\"We're working quickly on the LoI, but I'm afraid I can't name
\nany dates yet,\" Dipo told reporters after a meeting with the
\ngovernment economic team responsible for the LoI.<\/p>\n
The LoI contains a set of economic reform targets that the
\ngovernment agreed to meet as a condition for obtaining loans from
\nthe IMF.<\/p>\n
The IMF has delayed the disbursement of its $400 million loan
\ntranche since December after the government failed to meet the
\nrequired targets. The loan is part of the Fund's $5 billion loan
\npackage to help Indonesia cope with its worst ever economic
\ncrisis.<\/p>\n
Among the uncompleted targets were the divestment of
\ngovernment shares in Bank Central Asia (BCA) and Bank Niaga.<\/p>\n
Last year, the House of Representatives disapproved the
\ndivestment plan, due to the then unfavorable market conditions.<\/p>\n
But since then relations with the IMF have deteriorated and
\nlegislators last week approved the plan. The government plans to
\ndivest 40 percent of its ownership in BCA, and 51 percent in Bank
\nNiaga sometime in the middle of this year.<\/p>\n
Dipo said that the government has resolved the divestment
\nissue as demanded under the LoI, although its implementation will
\ntake several months.<\/p>\n
He also dismissed several media reports which claimed that the
\ngovernment was uncertain as to how much it planned to divest from
\nthe two banks.<\/p>\n
\"We've made sure that we will stick to our agreement with the
\nHouse,\" he said.<\/p>\n
Another reform target, he said, is the issuance of regulations
\nwhich would govern the creation of a contingency plan to cope
\nwith the possible shortfall of the state budget.<\/p>\n
Dipo said that the government was working on deciding how to
\nmanage this contingency budget.<\/p>\n
\"We hope to issue a government regulation and an accompanying
\nministerial decree (for the contingency budget) next week,\" he
\nsaid.<\/p>\n
He added that the IMF additionally requested the government to
\nfinalize government regulations regarding the regional financial
\ninformation system.<\/p>\n
The regional financial information system is necessary to
\nconsolidate the differing financial conditions of each region
\nunder the decentralized fiscal budget.<\/p>\n
Regions must report their budget status, and transaction flows
\nto central government in order to update a data base of every
\nregion's financial condition.<\/p>\n
\"We're preparing a government regulation on the regional
\nfinancial information system, and we expect the President to sign
\nit by next week,\" he said.<\/p>\n
Aside from targets outlined in the latest LoI, the IMF asked
\nfor the amendment of central bank Law No 23\/1999 to be addressed
\nwithout weakening Bank Indonesia's independence.<\/p>\n
Dipo said that the government had agreed to the IMF's request
\nfor a panel, comprising IMF and government-appointed experts, to
\nprovide input on the government-proposed bill.<\/p>\n
\"We've told the IMF that we're ready to form that panel. We're
\ncurrently discussing with the House on the panel's mechanism,\" he
\nsaid.<\/p>\n
Its formation stemmed from the IMF's concern that the new law
\nwould weaken Bank Indonesia's independence, which was a key
\nreform target stipulated in the 1998 LoI.<\/p>\n
Other concerns were that the move to amend the law was
\npolitically motivated, in order to oust Bank Indonesia's current
\ngovernor Sjahril Sabirin.<\/p>\n
Sjahril's job is still seen as politically strategic, despite
\nBank Indonesia's guaranteed independence from government
\nintervention.<\/p>\n
Legislators have urged that the new central bank law give
\npoliticians the opportunity to hold the top position at Bank
\nIndonesia.<\/p>\n
Dipo went on saying that IMF representatives on the panel
\ninclude a former central bank governor from Chile, and another
\nstill active central bank governor from New Zealand.<\/p>\n
This differs from an earlier government statement which said
\nthe representatives were two former central bank governors from
\nBrazil and Canada.<\/p>\n
According to Dipo, government representatives on the panel
\nwould include two banking experts.<\/p>\n
\"All we have to do now is to find these experts,\" he said.<\/p>\n
He said that he would meet with the IMF team on Friday evening
\nfor further discussions on the LoI. (bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-reform-target-ready-for-imf-review-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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