IMF assures CGI of Indonesian progress<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) assured on
\nFriday Indonesia's major donors grouped under the Consultative
\nGroup on Indonesia (CGI) of the country's progress in meeting
\neconomic reform targets.<\/p>\n
State Minister for National Development Planning (Bappenas),
\nKwik Kian Gie said the IMF had told the CGI during a meeting that
\n\"everything was fine and clear.\"<\/p>\n
\"The IMF's confirmation is important in such meetings; this
\ntime coming directly from Anoop Singh himself,\" Kwik said,
\nreferring to the IMF's Asia Pacific deputy director who is
\ncurrently leading the IMF team in Jakarta to draw up a new
\nlending agreement with the government.<\/p>\n
Friday's meeting between the IMF and local representatives of
\nCGI donor countries was hosted by the World Bank.<\/p>\n
Next to Kwik, representing the government were Coordinating
\nMinister for the Economy Dorodjatun Kuntjoro-Jakti and Bank
\nIndonesia Governor Sjahril Sabirin.<\/p>\n
\"Pak Dorodjatun gave an overview of Indonesia's economic
\ncondition and the positive response we have received up until now
\nfrom here and abroad,\" Kwik said.<\/p>\n
The CGI groups together Indonesia's major international
\nlenders, which last year pledged around US$4.8 billion in loans
\nto help plug this year's state budget deficit.<\/p>\n
Its biggest donors are the World Bank, the Asian Development
\nBank (ADB), and Japan.<\/p>\n
The World Bank and ADB have said their full support to
\nIndonesia depended on the country meeting reform commitments it
\nmade with the IMF.<\/p>\n
The banks have said that one of the preconditions for a \"high-
\ncase scenario\" was an agreement with the IMF over the economic
\nreform program.<\/p>\n
Meanwhile, Japan has slashed its Overseas Development
\nAssistance (ODA) budget, citing a sluggish economy.<\/p>\n
Kwik said the IMF's positive comments on Indonesia would help
\npave the way for a successful meeting of the CGI sometime in
\nNovember.<\/p>\n
He said Indonesia's stance for the upcoming CGI meeting
\ndepended on how the 2002 state budget would look like.<\/p>\n
Dorodjatun said earlier Indonesia was likely to ask the CGI
\nfor more loans to help finance the 2002 state budget.<\/p>\n
Concerns remain high that next year's budget would face
\nanother gaping deficit, which could exceed this year's projected
\n3.7 percent Gross Domestic Product (GDP).<\/p>\n
Aside from foreign loans, the government plans to plug the
\nbudget deficit with proceeds from asset sales by the Indonesian
\nBank Restructuring Agency (IBRA) and privatization of state-owned
\nenterprises.<\/p>\n
CGI's loans are mainly used to support social programs such as
\npoverty alleviation and good corporate governance.<\/p>\n
While the group reviews future loans based on Indonesia's
\nability to work with the IMF, it also demands the country fulfill
\nthe pledges it made to receive the loan.<\/p>\n
This year's failure to meet forestry commitments has irked
\ndonor countries during previous meetings with the government.<\/p>\n
The unrealized targets cover the combating of illegal logging,
\nspeeding up forest resources assessment and restructuring the
\ncountry's timber industry.<\/p>\n
But foreign support to Indonesia has strengthened since the
\nnew government took over with an economic team perceived as
\nmarket friendly.<\/p>\n
Indonesia is also close to signing a new lending agreement
\nwith the IMF, or Letter of Intent (LoI), that would unlock a long
\ndelayed $400 million loan tranche to the country.<\/p>\n
Securing a deal with the Fund is seen as essential to restore
\nIndonesia's tarnished image before the foreign financial
\ncommunity.<\/p>\n
The IMF had suspended its $5 billion loan program for
\nIndonesia last December, over the previous administration's
\nfailure to meet its LoI reform targets.<\/p>\n
Bank Indonesia Governor Sjahril said the government and the
\nIMF had agreed on the monetary targets for the new LoI.<\/p>\n
\"I can't tell you any figures yet; wait until Monday's
\nannouncement,\" he told waiting reporters.<\/p>\n
The IMF had earlier demanded a base money target of Rp 108
\ntrillion, but sources said that Bank Indonesia had been
\nnegotiating with the Fund to relax the target slightly.<\/p>\n
Singh said his team would be in Indonesia until next Monday.
\n(bkm)<\/p>",
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"sponsor": "Okusi Associates",
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