IMF approves $940 million payment for Indonesia<\/p>\n
WASHINGTON (Agencies): The International Monetary Fund (IMF)
\napproved a US$940 million in extended fund facility (EFF) as part
\nof its $11 billion loan to Indonesia on Friday and said it
\nwelcomed progress already made in restructuring Indonesia's
\nforeign debts.<\/p>\n
IMF Managing Director Michel Camdessus said in a statement
\nthat he was encouraged by the rupiah currency's recent stability
\nand he praised the government's \"good policy implementation under
\nextremely difficult circumstances.\"<\/p>\n
Indonesia was the second one-time Asian tiger economy to turn
\nto the IMF for help and its IMF loan was part of an international
\nrescue deal worth more than $40 billion.<\/p>\n
Earlier this week it agreed a $4.2 billion debt reorganization
\nwith the Paris Club of country creditors and it is now working on
\na deal with commercial creditors.<\/p>\n
But reforms underpinning the loan got off to a shaky start and
\nthe reform program was renegotiated several times. More than
\n1,200 people died in bloody rioting earlier this year after the
\ngovernment, bowing to and exceeding IMF demands, scrapped
\nsubsidies on food and fuel.<\/p>\n
In Friday's statement Camdessus said he welcomed the latest
\ngovernment decisions on subsidies, including the provision of
\nrice at subsidized levels to the poor.<\/p>\n
\"I welcome the intensified efforts made by the government to
\nhold down the price of essential commodities and the expansion of
\nthe program to provide rice at greatly subsidized prices to poor
\nfamilies,\" he said.<\/p>\n
The IMF has already said it expects Indonesian gross domestic
\nproduct to fall by as much as 15 percent this year, the steepest
\nfall among the IMF's borrowers in Asia.<\/p>\n
Fund officials say a government currency target of 10,000
\nrupiah to the dollar by next March's end of the fiscal year, a
\ngentle improvement from current levels around 11,000.<\/p>\n
The fund originally provided Indonesia with a \"stand-by\"
\ncredit arrangement last autumn, which was intended to remedy
\ntemporary balance-of-payments difficulties. But that program was
\naltered more than once this year amid persisting financial
\ndifficulties and was eventually converted into an EFF in August.<\/p>\n
The EFF is meant to address structural reform issues and
\noffers a longer repayment period.<\/p>\n
The switch in type of facility in August didn't change the
\ntotal amount committed by the institution to Indonesia. At the
\ntime of the switch in August, the IMF had already disbursed about
\n$5.1 billion of the $11.3 billion total, and upon that Aug. 25
\ndecision it disbursed roughly $1 billion.<\/p>\n
Friday's outlay was the next scheduled disbursement.<\/p>\n
The next one is scheduled for Oct. 25, and it is also expected
\nto amount to about $940 million. After that, disbursements are
\ndue Nov. 25, 1998; Feb. 15, May 15, Aug. 15, Nov. 15, all in
\n1999; and then continue through October 2000.<\/p>\n
The tranche amounts vary in dollar terms, because they are
\nconcluded in special drawing rights, the value of which
\nfluctuates. In terms of SDRs, the loan tranche released Friday
\ntotaled SDR684.3 million. The fund used an exchange rate of
\nSDR1=$1.36480 to come up with $940 million. The tranche released
\nin August amounted to SDR733.8 million.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-approves-940-million-payment-for-indonesia-1447893297",
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