IMF, government complete preliminary discussions<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The International Monetary Fund (IMF) and the government
\ncompleted on Tuesday their initial round of discussions on the
\nsixth review of the country's economic reform program.<\/p>\n
The discussions are designed to pave the way for the
\ndisbursement of the next IMF loan tranche to Indonesia.<\/p>\n
The IMF, whose mission to Jakarta is being led by its senior
\nadvisor for Asia Pacific Daniel Citrin, said in a press release
\nthat it would continue discussions with the government with a
\nview to reaching a final agreement over the economic reforms the
\ncountry must institute.<\/p>\n
The final result of the review, to be contained in a document
\nreferred to as a Letter of Intent (LoI), would be submitted to
\nthe IMF board of directors for approval, which would result in
\nthe disbursement of the next loan tranche expected to amount to
\nUS$350 million.<\/p>\n
The most recent disbursement was made last month when the IMF
\napproved a $347 million loan to help the country carry out badly
\nneeded economic reforms.<\/p>\n
The LoI contains a set of targets by which the IMF measures
\nIndonesia's progress with economic reform. Failure to meet the
\ntargets could lead to a halt in the IMF lending program.<\/p>\n
The IMF is sponsoring the reform program under a three-year $5
\nbillion loan package.<\/p>\n
The disbursement of the IMF loan will help improve confidence
\nin the country's economy.<\/p>\n
In its statement, the IMF also noted the country's improving
\nmacroeconomic situation, as evidenced by the strengthening of the
\nlocal currency, manageable inflation, and a downward trend in the
\ncentral bank's benchmark interest rate.<\/p>\n
The rupiah closed the day at Rp 9,030 against the dollar, the
\nhighest closing since September of last year.<\/p>\n
The IMF also said that the government was on track to achieve
\nits budget deficit target of 2.5 percent of gross domestic
\nproduct (GDP), provided that expenditure continued to be kept in
\ncheck.<\/p>\n
However, the IMF also urged the country to stick to the reform
\nprogram so as to ensure continued good market sentiment.<\/p>\n
\"It is now imperative to sustain recent gains by continued
\nprogress in the structural reforms ...,\" it stressed.<\/p>\n
The IMF said the sale of an 8.1 percent stake in state-owned
\ninternational call operator PT Indosat for $110 million last week
\nwas a crucial step in the government's privatization program, and
\nit looked forward to steady progress in the program over the
\ncoming months.<\/p>\n
Also decisive was the progress achieved in the divestment of
\nthe government stake's in local banks, and the efforts to bring
\nBank Internasional Indonesia (BII) back to better financial
\nhealth.<\/p>\n
Bank Niaga is currently up for sale, with the Indonesian Bank
\nRestructuring Agency (IBRA), the holder of 97.15 percent of
\nNiaga's shares, setting May 27 as the deadline for receipt of
\nfinal bids. Four bidders have been shortlisted.<\/p>\n
As for BII's rescue plan, the government is now seeking the
\napproval of the House for the bank to launch a rights issue to
\nraise some Rp 4.3 trillion to improve its capital adequacy ratio
\nfrom minus 47 to 17 percent.<\/p>\n
The government should also push ahead with its plans to force
\nformer bank owners to hand over assets to the state, in return
\nfor the huge amount of bailout funds they received as liquidity
\nloans during the crisis, the IMF said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-government-complete-preliminary-discussions-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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