Govt insists on maintaining high forex level<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The Minister of Finance, Boediono, said on Friday that the
\ngovernment would stick with its original plan to repay the
\nInternational Monetary Fund loan in seven years, turning down a
\nsuggestion from the House of Representatives, that the government
\nshould take advantage of the country's relatively high foreign
\nexchange reserves to complete the plan in three years.<\/p>\n
Boediono said that the economy would still need to maintain
\nhigh forex reserves amid lingering uncertainties, particularly in
\n2004, when the country holds general elections.<\/p>\n
\"2004 will be a crucial year filled with many uncertainties,
\nin the economy, politics, and security. So we must be ready with
\nsufficient forex reserves,\" he told reporters.<\/p>\n
The Chairman of the House Budget Committee, Abdullah Zainie,
\nwas quoted by Kompas daily as saying that, the House recommended
\nthat the government cut the country's debt to the IMF to below
\nthe member quota level of around $3 billion by 2006 -- so that
\nthe Fund could no longer influence the country's economic
\npolicies. Under the House proposal, the government would have to
\nallocate more than US$2 billion each year for installments. The
\ncountry's debt to the IMF would, therefore, reach $9.8 billion
\nwhen the existing IMF bailout program ends this year.<\/p>\n
Under the government's repayment plan, annual installments
\nwould be less than $1 billion, with the aim of decreasing the
\ndebt to below the quota level by 2010.<\/p>\n
The government will not extend the current IMF program when it
\nexpires at the end of this year, but has decided to maintain the
\nFund's monitoring role via the post program monitoring
\narrangement (PPM), under which the government must discuss its
\neconomic policies with the Fund.<\/p>\n
President Megawati Soekarnoputri is expected to unveil the
\ncountry's post-IMF economic reform policies on Aug. 15 with the
\n2004 state budget.<\/p>\n
Some experts have said that the termination of the IMF program
\nwould expose the economy to various risks, largely the absence of
\na debt rescheduling facility (from the Paris Club of creditor
\nnations). This would cause a serious fiscal threat unless the
\ngovernment found alternative funding sources. One alternative is
\nfor the government to tap the overseas financial market by
\nissuing bonds.<\/p>\n
Analysts have said that it is crucial for the government to
\nmaintain investors confidence by pushing ahead with tough
\neconomic reform programs.<\/p>\n
Meanwhile, Bank Indonesia senior deputy governor Anwar
\nNasution also said that it would be wiser for the government to
\nmaintain a high forex reserve level, to deal with the various
\nuncertainties caused by the threat of terrorism and the general
\nelection.<\/p>\n
\"We should stick with the (original) plan,\" he was quoted by
\nAntara as saying.<\/p>\n
\"The House must not interfere in economic affairs by
\npoliticizing it, don't (campaign) for a narrow nationalism.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-insists-on-maintaining-high-forex-level-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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