IMF, RI design new economic program<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) and the
\nIndonesian government are designing a completely new economic
\nprogram with a new funding scheme for the next three years.<\/p>\n
IMF Asia Pacific director Hubert Neiss told reporters on
\nTuesday both the old program and the remaining undisbursed loans
\nhad been canceled.<\/p>\n
\"A new amount (of loans) is pledged and that new amount, of
\ncourse, has to be approved by the IMF executive board,\" Neiss
\ntold a press conference following a meeting with the leaders of
\nthe House of Representatives.<\/p>\n
Neiss explained that under the old program, the IMF initially
\ncommitted a total of US$10 billion out of the $43 billion in the
\nbailout fund for Indonesia it had organized.<\/p>\n
He said the Fund then raised its commitment by more than $2
\nbillion, but this additional amount had not yet been disbursed.<\/p>\n
Asked to disclose the amount of the new pledge, Neiss said,
\n\"You'll see it in the new letter of intent ... It will be higher
\nthan what was left in the old program.\"<\/p>\n
But Neiss said the amount of the new loan was not important.<\/p>\n
\"This is because Indonesia is no longer in a balance of
\npayments crisis. Indonesia's financial situation has stabilized,
\nand its foreign exchange reserves have been replenished,\" he
\nsaid.<\/p>\n
\"So there's no longer an emergency,\" he added.<\/p>\n
Indonesia agreed in November, 1997, on an IMF-led bailout
\nprogram amounting to $43 billion to help restore confidence in
\nthe ailing rupiah. The Fund has thus far disbursed some $10
\nbillion out of its $12.3 billion commitment.<\/p>\n
Neiss came to Jakarta late last week to finalize talks with
\nthe Indonesian government over the country's new letter of intent
\n(LoI) to the Fund.<\/p>\n
The LoI comprises Indonesia's basic economic strategies which
\nare to be financed by the IMF.<\/p>\n
Neiss said on Monday some 90 percent of the content of the LoI
\nhad been agreed.<\/p>\n
The new LoI is expected to be unveiled in the middle of
\nJanuary when the government submits the next April 2000-December
\n2000 state draft budget to the House of Representatives.<\/p>\n
Once the LoI is approved by the IMF executive board, which is
\nalso expected in the middle of January, the Fund will disburse
\nits loans to the country.<\/p>\n
Two of the thorniest issues in the new LoI are the planned
\nreduction of government subsidies on fuel and electricity and the
\nsize of import tariffs to be imposed on rice and sugar.<\/p>\n
Director general of oil and gas at the Ministry of Mines and
\nEnergy Rachmat Sudibyo said on Tuesday the government and the IMF
\nhad agreed to reduce fuel and electricity subsidies, which would
\nresult in a 20 percent increase in fuel prices and 35 percent
\nincrease in electricity tariffs.<\/p>\n
Rachmat also said the IMF had agreed the new fuel and
\nelectricity price policy would be implemented in April, the start
\nof the country's next state budget.<\/p>\n
Speaking to reporters after meeting with the IMF and World
\nBank officials, he said the IMF had initially demanded the new
\npolicy to be implemented in January.<\/p>\n
The IMF and the World Bank have urged the government to
\ngradually reduce the subsidies to create a healthy state budget.<\/p>\n
Meanwhile, Minister of Trade and Industry Jusuf M. Kalla said
\nthe government and the IMF had yet to agree on the magnitude of
\nthe planned import tariffs on rice and sugar.<\/p>\n
\"We'll continue discussing it with the IMF tomorrow
\n(Wednesday),\" Kalla told reporters.<\/p>\n
Minister of Cooperatives Zakarsih M. Noor said the government
\nwas proposing an import tariff of 30 percent for rice in a bid to
\nprotect local farmers from cheaper imported product, but at the
\nsame time still provide a profit margin for traders to import the
\ncommodity.<\/p>\n
\"The IMF wants a tariff of only 10 to 20 percent, so I think
\nwe could get a tariff of around 25 percent,\" he said.<\/p>\n
The IMF has been traditionally against any trade protection
\nmeasures.<\/p>\n
The government has said the next state budget would reflect
\nefforts to reduce the country's dependence on foreign loans.<\/p>\n
The World Bank said in a statement on Tuesday it had agreed
\nwith the Indonesian government to cancel $556 million in 43
\nproject loans, which represented 18 percent of its undisbursed
\nloans to the country.<\/p>\n
World Bank country director for Indonesia Mark Baird said, \"By
\ncanceling components of slow-moving projects, we are working with
\nthe government to maintain the relevance and effectiveness of our
\nprograms, while reducing the overall financial burden Indonesia
\nfaces.\"<\/p>\n
\"In this way, we can reorient our programs to support
\nIndonesia's priorities as it emerges from the crisis.\"<\/p>\n
The World Bank and the government of Indonesia embarked on a
\nprogram of loan portfolio restructuring over a year ago,
\ncanceling nearly $1 billion in commitments to ongoing projects
\nand redirecting another $1 billion to crisis-targeted programs
\nsuch as school scholarships, social and human development and
\nrural investment. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-ri-design-new-economic-program-1447893297",
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"sponsor": "Okusi Associates",
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