IMF confirms progress has been made in talks with government<\/p>\n
JAKARTA (JP): International Monetary Fund Jakarta
\nrepresentative John Dodsworth confirmed on Thursday progress had
\nbeen made in resolving differences with the government over key
\neconomic reform programs.<\/p>\n
Dodsworth said an IMF review team was expected to visit
\nJakarta \"very soon\", although no exact date had been set because
\nthere were a few remaining issues that still must be settled.<\/p>\n
He was speaking to journalists following a meeting with Dipo
\nAlam, a senior aide to Coordinating Minister for the Economy
\nRizal Ramli.<\/p>\n
Dodsworth said among the areas of progress was the issuance of
\na government decree banning regional administrations from seeking
\nloans despite the new fiscal decentralization policy.<\/p>\n
Senior economic ministers, including Minister of Finance
\nPrijadi Praptosuhardjo and Rizal, said earlier the differences
\nbetween the IMF and the government were narrowing. In light of
\nthese developments, they expressed optimism the IMF would finally
\nrelease its next US$400 million loan tranche to the country.<\/p>\n
Prijadi said he hoped the IMF review team would arrive in
\nJakarta in April to sign a new agreement with the government.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin said last week mending
\nrelations with the IMF would be a significant step toward shoring
\nup the ailing rupiah.<\/p>\n
The IMF delayed the disbursement of the $400 million tranche
\nlate last year because of what it saw as the government's
\nwavering commitment to the implementation of key economic reform
\nprograms, particularly the divestment of government ownership in
\npublicly listed Bank Central Asia (BCA) and Bank Niaga.<\/p>\n
The IMF also expressed concern with the poorly designed fiscal
\ndecentralization policy and the government-proposed amendment of
\nthe central bank law, which some observers say could jeopardize
\nBank Indonesia's independence.<\/p>\n
The government is set to divest a majority of its stake in BCA
\nand Bank Niaga in the first semester of this year following the
\nlegislature's recent approval of the sale.<\/p>\n
The government has also agreed to the IMF's demand for the
\nestablishment of a panel of international and domestic experts to
\nreview the amendment of the central bank law.<\/p>\n
The standoff with the IMF has prompted other key multinational
\nlenders such as the World Bank and the Asian Development Bank to
\nannounce they may also cut assistance to the country.<\/p>\n
This contributed to the recent fall of the rupiah to a 30-
\nmonth low of about Rp 11,500 to the US dollar, forcing Bank
\nIndonesia to sell its dollar reserves and raise interest rates to
\nhelp defend the local currency.<\/p>\n
Prijadi said on Thursday the IMF had warned the government
\nrising domestic interest rates and the falling rupiah could
\nseriously affect the 2001 state budget.<\/p>\n
\"The IMF has warned us about the impact of higher rates and
\nthe weaker rupiah on the state budget. In the near future, we
\nwill meet with the IMF to discuss how to overcome this problem,\"
\nPrijadi told the House of Representatives' budget committee.<\/p>\n
The benchmark interest rate on the one-month Bank Indonesia
\nSBI note rose to 15.58 percent at Wednesday's auction from 15.24
\npercent.<\/p>\n
The current state budget assumes an SBI rate of 11 percent and
\nan exchange rate of Rp 7,800 to the dollar.<\/p>\n
The rupiah ended lower on Thursday at Rp 10,415 against the
\ndollar from Rp 10,378 on Wednesday. (rei)<\/p>",
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