Govt optimistic about IMF loan as negotiations start<\/p>\n
JAKARTA (JP): The government expressed optimism on Thursday
\nthat the International Monetary Fund (IMF) would disburse its
\nstalled loan tranche to the country, as the two sides began
\neconomic talks late in the day.<\/p>\n
Coordinating Minister for the Economy Burhanuddin Abdullah
\nalso repeated his optimism that the 9-day negotiations with the
\nIMF would run well.<\/p>\n
\"From the impression in (today's) meeting, I think it will run
\nsmoothly,\" Burhanuddin said, as he emerged from a meeting between
\nsenior economic ministers and the IMF special mission.<\/p>\n
When asked if the current talks would finally lead to the
\ndisbursement of the IMF money, he said \"I am optimistic.\"<\/p>\n
The IMF special mission arrived in Jakarta at noon on
\nThursday, led by deputy director for Asia Pacific Anoop Singh.<\/p>\n
The government and the IMF team will discuss various economic
\nissues, and the two are expected to draw up a new letter of
\nintent (LoI) that will essentially contain certain economic
\nreform programs and economic targets that must be implemented and
\nachieved by the government.<\/p>\n
The new LoI will then be presented to the IMF executive board
\nin Washington for approval, a necessary condition for
\ndisbursement of the Fund's money.<\/p>\n
The IMF is providing the country with a US$5 billion bailout
\nloan, but it canceled the disbursement of the latest $400 million
\nloan tranche late last year, amid signs that the government was
\nwavering in the implementation of an agreed reform program.<\/p>\n
The delay in the IMF loan further eroded the confidence of
\ninvestors and the country's major lenders.<\/p>\n
In a bid to mend relations with the IMF, President Abdurrahman
\nWahid appointed Burhanuddin as the chief economics minister last
\nmonth.<\/p>\n
Meanwhile, Singh declined to comment on whether the plan by
\nthe People's Consultative Assembly (MPR), the country's top
\nlegislature, to impeach Abdurrahman would affect the IMF program.<\/p>\n
\"We don't get into these things,\" Singh was quoted by Reuters
\nas saying.<\/p>\n
The MPR is planning to hold a special session on August 1,
\nwith a possibility of impeaching Abdurrahman over alleged
\nfinancial scandals and the poor performance of his
\nadministration.<\/p>\n
There has been speculation that the IMF would not disburse its
\nmoney unless there were a strong and credible government in
\nplace.<\/p>\n
Elsewhere, Burhanuddin said that the 9-day discussion would
\nfirst focus on macroeconomic issues, particularly inflation.<\/p>\n
\"We'll talk first about inflation ... We must address this
\nproblem,\" Burhanuddin said.<\/p>\n
\"We will also focus on how to rebuild market confidence via
\nvarious macroeconomic stability programs,\" he said.<\/p>\n
He added that the government and the IMF would also focus on
\nhow to achieve fiscal sustainability this year and next.<\/p>\n
\"This is very important for macroeconomic stability,\" he said.<\/p>\n
The government recently introduced certain measures, including
\nraising fuel prices and electricity rates in a bid to limit the
\n2001 state budget deficit to 3.7 percent of gross domestic
\nproduct (GDP). The IMF had earlier warned that the deficit could
\nwiden to 6 percent of GDP, unless measures were taken.<\/p>\n
Burhanuddin said that the IMF team would also meet with the
\nIndonesian Bank Restructuring Agency and the Jakarta Initiative
\nTask Force over ways to accelerate bank and corporate
\nrestructuring. (rei)<\/p>",
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