Govt expects 'smooth' talks with IMF<\/p>\n
JAKARTA (JP): Coordinating Minister for the Economy
\nBurhanuddin Abdullah expressed optimism on Wednesday that the
\nmuch-awaited economic talks with the International Monetary Fund
\n(IMF), scheduled to start on Thursday, would run well and
\nencourage the IMF to disburse its crucial loan tranche to the
\ncountry.<\/p>\n
Burhanuddin said that the IMF special mission, led Asia
\nPacific deputy director Anoop Singh, was expected to arrive in
\nJakarta on Thursday for a nine-day visit.<\/p>\n
\"I think this will proceed smoothly,\" he said following a
\nCabinet meeting with Vice President Megawati Soekarnoputri.<\/p>\n
\"We hope to have an effective discussion because the IMF team
\nwill only be here for eight to nine days,\" he added.<\/p>\n
Burhanuddin said that negotiations with the IMF team would
\nfocus on measures to achieve macroeconomic and monetary
\nstability.<\/p>\n
He added that the fund would also talk to the Indonesian Bank
\nRestructuring Agency (IBRA) and the Jakarta Initiative Task Force
\n(JITF).<\/p>\n
He expected that an agreement could be reached at the end of
\nthe nine-day visit, so that it could be brought before the IMF
\nexecutive board in Washington for approval, a condition for
\ndisbursement of the IMF's US$400 million loan tranche.<\/p>\n
The IMF is providing the country with a $5 billion bailout
\nloan, however, disbursement of its fourth loan tranche was
\nsuspended late last year amid signs that the government was
\nwavering with the implementation of agreed economic reforms.<\/p>\n
The delay in disbursement of the IMF loan installment has
\nfurther eroded confidence in the ailing economy and jeopardizes
\nlast year's agreement reached between the government and the
\nParis Club of creditor nations for the rescheduling of
\nIndonesia's sovereign debts maturing in 2001.<\/p>\n
In a bid to mend relations with the IMF, President Abdurrahman
\nWahid appointed Burhanuddin last month as the new economics
\nminister, replacing Rizal Ramli who was appointed finance
\nminister.<\/p>\n
Unlike his predecessor, Burhanuddin, previously a deputy
\ngovernor of Bank Indonesia with several years experience working
\nat the IMF, believes that the IMF's role is crucial in helping
\nthe country's dilapidated economy recover.<\/p>\n
The government and the IMF also recently agreed to
\ntemporarily sideline their differences over the controversial
\nBank Indonesia law amendment.<\/p>\n
Burhanuddin said that the IMF mission would not touch on the
\nissue of the central bank law amendment.<\/p>\n
He said that discussing the central bank law would need a
\nlonger timeframe in order to achieve a satisfactory outcome.<\/p>\n
\"More time is needed to study (the proposed amendment) so that
\nwe can obtain good results,\" he said.<\/p>\n
The government-proposed amendment of the central bank law had
\nbeen a major sticking point between Indonesia and the IMF. The
\ngovernment insisted that the amendment was needed to improve the
\naccountability of Bank Indonesia, while the IMF feared that it
\nwould jeopardize the hard-won independence of the central bank.<\/p>\n
The main point of dispute centers on Article 75 of the bill,
\nwhich stipulates that the existing Bank Indonesia board of
\ngovernors must step down once the bill becomes effective. The IMF
\nhas said that this amounts to political intervention.<\/p>\n
Meanwhile, IMF Jakarta representative John Dodsworth was
\nquoted as saying by Reuters on Wednesday, that it could take
\nseveral months to reach agreement with the government regarding
\nthe central bank law changes, but added that there had been
\nsufficient compromise to break a six-month standoff.<\/p>\n
\"The compromise is about taking more time ... there is still
\nno compromise on the actual solution. That will come later,\"
\nDodsworth said.<\/p>\n
He explained that the government would be working in
\nconsultation with the IMF and the legislature over the next six
\nmonths to devise amendments to the central bank law that were
\nmutually acceptable.<\/p>\n
Asked whether this week's IMF mission would lead to the
\ndisbursement of the fund's loan tranche, he said: \"That's why the
\nmission is coming, to facilitate the disbursement of the next
\ntranche.\" (rei\/prb)<\/p>",
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