IMF and donors boost RI bailout<\/p>\n
WASHINGTON (Reuters): The International Monetary Fund on
\nWednesday approved an immediate $1 billion loan payment to
\nIndonesia and said donors agreed to increase bailout lending by
\n$6 billion on top of previous commitments.<\/p>\n
The IMF said new financing for the program would be provided
\nthrough an \"informal arrangement\" among bilateral creditors. In
\naddition to the IMF, the statement said Australia, China, the
\nAsian Development Bank and the World Bank would provide the
\nsupplemental loans.<\/p>\n
\"The total additional financing for the program, including the
\nincrease in the IMF stand-by credit, amounts to over $6 billion,
\nall of which is to be provided before end-March 1999,\" the IMF
\nstatement said.<\/p>\n
\"This comes on top of substantial external financing
\npreviously committed by multilateral institutions, and by Japan
\nand other bilateral donors.\"<\/p>\n
The IMF assembled a $41 billion bailout for Jakarta last year
\nafter the country's financial markets collapsed amid the wider
\nAsian financial crisis.<\/p>\n
IMF loan payments were stopped in May because of the political
\nand economic chaos that led to the resignation of long-ruling
\npresident Soeharto.<\/p>\n
The crisis rendered previous IMF targets for the Indonesian
\neconomy meaningless, as the currency collapsed, spurring
\ninflation and leaving many heavily indebted companies vulnerable
\nto bankruptcy.<\/p>\n
Because conditions had deteriorated so much, the IMF said the
\nexisting bailout package had to be increased by $6 billion.<\/p>\n
The IMF said it agreed to boost the size of its 36-month
\nstand-by credit for Indonesia by $1.3 billion, to a new total of
\n$11 billion.<\/p>\n
The fund said its board also approved an immediate loan
\npayment of $1 billion, bringing total IMF disbursements under the
\nstand-by credit to $4.9 billion.<\/p>\n
In the statement, Alassane Ouattara, one of the IMF's deputy
\nmanaging directors, said the fund's directors had commended the
\nIndonesian government for \"good policy implementation in very
\ndifficult circumstances.\"<\/p>\n
He said the executive board \"welcomed the economic priorities
\nset by the government to prevent a further economic decline,
\nreduce inflation, and to substantially intensify its efforts to
\nprotect the poor from the worst effects of the crisis.\"<\/p>\n
Social programs<\/p>\n
Ouattara said IMF directors also agreed that a much higher
\nbudget deficit was needed to support subsidies on essential goods
\nand for social programs.<\/p>\n
\"Continued firm control over monetary policy and rapid
\nimplementation of the reforms under way in the banking system and
\ncorporate restructuring were also viewed as policy priorities,\"
\nhe said.<\/p>\n
In Jakarta, the Indonesian financial market cheered the IMF's
\nfresh loan package.<\/p>\n
The rupiah jumped seven percent to 13,200 against the U.S.
\ndollar at the close of the trading, while share prices on the
\nJakarta Stock Exchange (JSX) gained 1.4 percent, dealers and
\nstockbrokers said.<\/p>\n
\"That's a very positive news the market has been waiting for.
\nHopefully, this momentum could be maintained so that we could
\nlead to recovery,\" Vickers Ballas Tamara's head of research
\nNoraya Soewarno said.<\/p>\n
Currency dealers said the news of the extra funding, which
\nbrings the total existing IMF rescue package to $46 billion
\nencouraged investors to buy rupiah, assuming that the currency
\ncould strengthen further to the level of 10,000 as set by the IMF
\nand the government.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita said he was happy with the IMF's decision
\nto provide the $1 billion in immediate aid and the additional
\nloan package.<\/p>\n
\"Now we have a certainty on our state budget, there is also
\ncertainty with our balance of payment, the same thing we hope
\nwith the settlement of our corporate debt,\" he told reporters.
\n\"This will give positive impact to the market and boost the
\nconfidence on our economy, which we hope will be also reflected
\nin the value of rupiah,\" he added.<\/p>\n
Cooperation<\/p>\n
Meanwhile in Tokyo, Finance Minister Hikaru Matsunaga said
\nyesterday that Japan will continue to cooperate with other
\ncountries and multilateral agencies on aid for Indonesia.<\/p>\n
\"We welcome that the IMF executive board has approved its
\nreview of Indonesia's economic program on July 15, and its
\ndrawing right of $1 billion,\" Matsunaga said in a statement.<\/p>\n
\"Japan is the largest provider of bilateral assistance (to
\nIndonesia). We will continue to cooperate appropriately within
\nthe framework of international assistance such as this latest
\nagreement,\" Matsunaga said.<\/p>\n
Japan is likely to be the biggest national contributor to
\nplanned additional aid for Indonesia through the IMF, according
\nto senior finance ministry official.<\/p>\n
\"Japan is included among the bilateral contributors... Japan's
\ncontribution will be the biggest, as before. Our contribution
\nwill likely take the form of new money,\" the Finance Ministry
\nofficial said.<\/p>\n
He said almost 20 countries were likely to contribute to the
\nadditional bailout lending for Indonesia.<\/p>\n
He declined to comment on how much individual countries and
\nthe World Bank and Asia Development Bank (ADB) would contribute.<\/p>\n
The IMF said financing for the increased lending would be
\nprovided through an \"informal arrangement\" among bilateral
\ncreditors, meaning through rescheduling of principle payments or
\nprovision of an equivalent amount of money.<\/p>\n
Statement -- Page 10<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/imf-and-donors-boost-ri-bailout-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }