IMF, foreign donors urged to quickly disburse loans<\/p>\n
JAKARTA (JP): Economists welcomed yesterday Indonesia's new
\naccord with the International Monetary Fund (IMF) and urged the
\nagency and other donors to quickly disburse their pledged loans
\nto the country to prevent costlier crisis-saving measures.<\/p>\n
\"The loans have to be disbursed quickly or the bailout efforts
\nwill be fruitless,\" said Umar Juoro, a senior economist at the
\nCenter for Information and Development Studies (CIDES).<\/p>\n
He predicted that the financial markets would react positively
\nwhen the IMF and other donor institutions, including the Asian
\nDevelopment Bank and the World Bank, realized their loan
\ncommitments.<\/p>\n
The market's response to the new IMF deal was cool yesterday
\nbecause it had already been discounted, he added.<\/p>\n
The rupiah stayed at Rp 14,800 to the U.S. dollar yesterday, a
\ndepreciation of about 80 percent from its value last July.<\/p>\n
\"There was nothing new. The market has anticipated it,\" said
\nGoei Siauw Hong, head of research at SG Securities Indonesia,
\ncommenting on the market's cool reaction to the new IMF accord.<\/p>\n
The government announced yesterday a new memorandum of
\neconomic and financial policies signed with the IMF Wednesday
\nafternoon. The deal, the third revision of the reform program
\nsigned with the IMF in October last year, calls for a larger
\nsubsidy allocation in the state budget and an accelerated effort
\nto restructure the country's ailing banking sector.<\/p>\n
Indonesia sought the IMF's financial and technical assistance
\nlast year to help lift the country from its worst-ever economic
\ncrisis due to the sharp drop in the rupiah against the U.S.
\ndollar.<\/p>\n
The Fund has a commitment to provide $10 billion in a balance-
\nof-payment loan as part of the US$43 billion bailout fund to help
\nlift the country out of its crisis.<\/p>\n
The Fund, which had disbursed $4 billion, was initially
\nscheduled to extend another $1 billion earlier this month, but
\ndelayed it due to the political unrest in May.<\/p>\n
The economic assumptions in the new IMF accord have also been
\nrevised. The economy is now projected to shrink around 10 percent
\nthis year, annual inflation to reach 80 percent, the rupiah to
\nstabilize at about Rp 10,000 to the dollar by the last quarter of
\n1998, and the budget deficit for the 1998\/1999 fiscal year to
\njump to 8.5 percent of gross domestic product.<\/p>\n
\"The new macroeconomic assumptions indicate that our economic
\noutlook is gloomy,\" Umar said.<\/p>\n
Former central bank director I Nyoman Moena also urged the IMF
\nand other donor institutions to immediately extend their loan
\ncommitments to help stabilize the rupiah.<\/p>\n
The stabilization of the rupiah is considered key to solving
\nproblems like the huge budget deficit, banking restructuring, and
\ngovernment and private sector overseas debts, he said.<\/p>\n
\"The immediate disbursement of the aid commitments will be key
\nto stabilizing the rupiah.\"<\/p>\n
He added, however, that the $1 billion tranche to be disbursed
\nby the IMF was no longer enough because the economy had plunged
\ndeeper into recession than was predicted when the last deal was
\nmade.<\/p>\n
\"That amount would have been enough if it was disbursed two
\nmonths ago,\" he said.<\/p>\n
He said the IMF should provide the country with at least $3
\nbillion in the up-coming disbursement, as initially agreed with
\nthe Fund in October. This was slashed to $1 billion when ex-
\npresident Soeharto backtracked from the agreed economic reform
\nprograms.<\/p>\n
Nahdlatul Ulama (NU) chairman Abdurrahman Wahid said there
\nshould not be any grounds for Indonesians not to support the
\nlatest agreement.<\/p>\n
\"I call on Indonesians to support the agreement and President
\nB.J. Habibie's effort to bring an end to the economic crisis,
\ndespite all our political differences,\" he said following a
\nmeeting with the IMF's Asia Pacific director Hubert Neiss.<\/p>\n
Neiss paid a visit to Abdurrahman's residence yesterday to
\nseek the NU chairman's views on the IMF-sponsored reform program.
\nThe IMF director was accompanied by IMF senior resident
\nrepresentative Kadhim Al-Eyd. (rei\/aly\/imn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-foreign-donors-urged-to-quickly-disburse-loans-1447893297",
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