Govt to get $450 million from IMF<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Following two weeks of discussion, the government and the
\nInternational Monetary Fund (IMF) wrapped up on Thursday the
\ncountry's new economic reform programs, outlined under the eighth
\nletter of intent (LoI), to clear the way for the disbursement of
\nsome US$450 million in IMF loan.<\/p>\n
Under the reform programs, the government must increasingly
\nfocus on speeding up growth and making significant inroads into
\nreducing poverty and unemployment, the fund said in a media
\nrelease.<\/p>\n
It also added that there was agreement on overriding
\npriorities -- consolidating gains in macroeconomic stability,
\nstrengthening public debt sustainability over the medium term,
\ncontinuing progress in restoring a sound banking sector and
\nimproving the investment climate.<\/p>\n
"With strong implementation, the mission team believes these
\npolicies will help attain the overarching goals of boosting
\neconomic growth and reducing poverty in Indonesia," the statement
\nsaid.<\/p>\n
Consequently, enhancing the investment climate through legal
\nreforms would form a major part of this year's program.<\/p>\n
Although successful in stabilizing the country's macroeconomic
\nindicators, progress in reforming its judiciary -- one of the
\nmain prerequisites for returning confidence to investors -- has
\nbeen slow.<\/p>\n
As a result, investment, both from foreign and domestic
\nsources has remained scarce.<\/p>\n
Consequently, this has hampered efforts to accelerate economic
\ngrowth. If this continues, the economy would only grow at a
\nmediocre level.<\/p>\n
The economy is targeted to grow by around 4 percent this year,
\nwhich is deemed insufficient to absorb rising unemployment. New
\njobseekers alone are estimated to reach 2.5 million annually.<\/p>\n
The LoI contains a set of economic targets and a reform agenda
\nthat must be completed within a certain period of time by the
\ngovernment in exchange for the IMF money.<\/p>\n
It will be presented to IMF management for approval before
\nbeing finalized and signed. The letter will then be submitted to
\nthe IMF's executive board for approval.<\/p>\n
The last disbursement, amounting to $365 million, was made in
\nDecember to bring the total loans the country has taken out so
\nfar to around $3 billion, from a total loan package of $4.8
\nbillion agreed between the government and the IMF in 1999.<\/p>\n
This means that $1.8 billion is left from the program, slated
\nto expire this year.<\/p>\n
The government is under pressure not to extend the IMF program
\non the grounds that the IMF's medicine has failed to cure the
\ncountry's ailing economy.<\/p>",
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