IMF delays credit disbursement to Indonesia<\/p>\n
WASHINGTON (Dow Jones): The International Monetary Fund will
\ndelay credit disbursements to Indonesia until the terms of a
\n$10.1 billion standby credit arrangement can be renegotiated, a
\nsenior IMF official said.<\/p>\n
Stanley Fischer, first deputy IMF managing director, confirmed
\nthat civil unrest and a range of political uncertainties
\nsurrounding the Soeharto government will necessitate a delay in
\nthe previously planned disbursement on June 4 as \"a practical
\nmatter.\"<\/p>\n
\"If yesterday was a bad day to be clear about what is going to
\nhappen (in Indonesia), today is a worse day,\" Fischer said.<\/p>\n
He added, \"It's clear that we won't be able to move ahead
\n(with further disbursements) until the political situation
\nclarifies. That's the basic situation.\"<\/p>\n
Fischer, who acknowledged the IMF isn't certain when it will
\nbe in a position to resume credit outlays, stressed that given
\nthe depth of the rupiah's decline in recent days, and the impact
\non a host of macroeconomic assumptions embodied in the IMF
\nprogram, it is \"very likely\" that terms of the program will have
\nto be revamped.<\/p>\n
The senior IMF official underlined the importance of political
\nstability in Indonesia, noting that the IMF needs a \"reasonable\"
\npolitical system with which to work. And while Fischer wouldn't
\nbe drawn into details on sensitive political issues, he
\nacknowledged that if Indonesian authorities were to choose a hard
\nline crackdown, further IMF aid would be unlikely.<\/p>\n
Fischer pointed to the IMF's 24-member executive board as the
\npolitical compass of the institution. And he noted the likelihood
\nthat an Indonesia government crackdown on political dissent would
\nbe met with opposition on the fund board.<\/p>\n
As for the IMF program, Fischer said revisions to
\nmacroeconomic assumptions could be limited if political stability
\nis quickly restored, and investor confidence boosts the rupiah
\nfrom current low levels. However, Fischer suggested that the IMF
\nremains skeptical about prospects for a rapid rebound in investor
\nconfidence.<\/p>\n
\"I don't think there's any question that the Indonesian
\neconomy will be set back by what has happened,\" Fischer said.
\n\"How far? We can't tell.\"<\/p>\n
An IMF mission was scheduled to visit Jakarta last week to
\nbegin the review process necessary for a $1 billion credit outlay
\non June 4. But the mission was held because of mounting civil
\nunrest.<\/p>\n
Total IMF outlays to Indonesia are $4 billion. Additionally,
\nbilateral assistance to Indonesia has been slightly less than
\nthat amount, which translates into disbursement of less than a
\nquarter of a $43 billion aid package pledged to Indonesia.<\/p>\n
Once the IMF can send a mission to Indonesia, Fischer said
\nthat structural economic reform goals embodied in the current
\neconomic program still will remain key to any revised program.
\nThe senior official said that \"I can't imagine\" structural
\nreforms would be dropped by the IMF.<\/p>\n
\"Any new, meaningful program for Indonesia would have the same
\nstructural reforms,\" agreed Hubert Neiss, the IMF's regional
\ndirector.<\/p>\n
Fischer, in turn, suggested that spill over from Indonesian,
\nor market contagion, has been limited in Asia, and elsewhere.<\/p>\n
The senior IMF official said that South Korea and Thailand,
\nwhich are the other major IMF program nations, \"have not been
\nvery affected.\"<\/p>\n
\"As far as the program in Korea and Thailand go, those
\nprograms are on track,\" Fischer said. He noted that \"cooperation
\nis very good\" and the governments \"are very serious.\" And he
\ninsisted that \"I don't see much feedback\" from Indonesia in Korea
\nand Thailand.<\/p>\n
Is there danger that IMF mandates in Indonesia will feed into
\nbroader unrest and repercussions in Asia? \"I think what happens
\nin Korea will be driven by the Korea program and what happens in
\nThailand will be driven by the Thai program,\" Fischer replied.<\/p>\n
Fischer said that if Indonesia sought to attain the same
\neconomic performance now as it has under its current program
\ngoals it would likely need additional external aid beyond the
\nmulti-billion-dollar package already pledged.<\/p>\n
\"I'm not sure they'll get more money,\" Fischer said, noting
\nquestions about Indonesia's commitment to economic reforms, and
\nthe uncertainties surrounding the politics within the nation.<\/p>",
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