IMF review team arrives<\/p>\n
Berni K. Moestafa
\nThe Jakarta Post
\nJakarta<\/p>\n
Representatives from the International Monetary Fund (IMF)
\narrived in Jakarta on Thursday for a two-week mission to review
\nthe government's progress in meeting reform targets under the
\nletter of intent (LoI).<\/p>\n
\"We're here for the fifth review of the program,\" IMF senior
\nadvisor for the Asia Pacific department and team leader Daniel
\nCitrin told reporters at the Ministry of Finance, where the team
\nmet senior economics ministers.<\/p>\n
His team makes regular visits to Jakarta to monitor progress
\nin achieving reform targets, and draft new ones for the next LoI.<\/p>\n
The LoI is a lending agreement containing reform policies,
\nwhich the government complies with in exchange for IMF loans.<\/p>\n
On Monday, the fund approved the disbursement of US$341
\nmillion in loans, after its board of executives passed the latest
\nLoI, which the government signed last December.<\/p>\n
Citrin and his team arrived at the same time Jakarta is
\nexpected to finalize the crucial sale of Bank Central Asia (BCA).<\/p>\n
A staunch sponsor of state asset sales and free market
\nprincipals, the IMF has tied its loan program to the successful
\nsale of strategic state assets.<\/p>\n
BCA's sale forms part of the current LoI reform targets. Its
\nfrequent delays in the past contributed to the eight-month-long
\nsuspension of the IMF loans until August of last year.<\/p>\n
Entering its final stage, BCA's sale has become a litmus test
\nfor the government to secure asset sales.<\/p>\n
\"I don't know the details, so far the BCA sale process has
\nbeen appropriately conducted,\" Citrin said.<\/p>\n
Also on the agenda of the review team is a government plan to
\ngrant bad debtors a grace period of up to 10 years.<\/p>\n
Citrin said it was too early to comment on the plan.<\/p>\n
Earlier, IMF senior resident representative for Indonesia
\nDavid C. Nellor said the fund's team would like to know the
\ngovernment's intentions behind such a plan.<\/p>\n
Proposed by the Indonesian Bank Restructuring Agency (IBRA),
\nthe plan seeks to entice bad debtors to begin payments after over
\nthree years of neglect.<\/p>\n
There are strong doubts, however, as to whether incentives --
\ninstead of punishment -- would be the most appropriate way to get
\nuncooperative debtors to pay back their loans.<\/p>\n
The plan may also come into conflict with the current LoI,
\nimplying that a need exists for stronger legal action against
\noutstanding debtors.<\/p>\n
\"IBRA intends to make more decisive action against
\nnoncooperating debtors ... In future, IBRA envisages more regular
\nuse of its PP17,\" point 34 in the current LoI says.<\/p>\n
The PP17 refers to government regulation 17 on IBRA.<\/p>\n
Armed with this, IBRA possesses special legal powers to go
\nafter bad debtors, but critics say utilization of these powers is
\nlow, if not nonexistence.<\/p>\n
The LoI expects the government to finalize by end of March the
\nnecessary steps needed to force bad debtors into paying.<\/p>\n
For its part, the government has formed a team which will have
\nuntil mid February to review the debt extension plan.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-review-team-arrives-1447899208",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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