IMF tells IBRA to sell rescued banks: Report<\/p>\n
WASHINGTON (Bloomberg): The Indonesian Bank Restructuring
\nAgency must sell two banks it rescued three years ago before the
\nInternational Monetary Fund will resume lending to the nation,
\nfund officials told the Financial Times.<\/p>\n
The agency's sale of PT Bank Central Asia and PT Bank Niaga
\nusing \"robust and transparent guidelines,\" is one of three steps
\nJakarta must make before the fund provides a $400 million
\ndisbursement delayed since December, the fund said.<\/p>\n
\"This is a litmus test of the government's intention to return
\nassets to the private sector,\" said Anoop Singh, the fund
\nofficial who conducted negotiations with Indonesia, the newspaper
\nreported.<\/p>\n
Indonesian officials said this week that they will speed the
\noverdue sales.<\/p>\n
In addition to the bank sales, which Indonesia had pledged to
\ndo by the end of last year, Singh told the Financial Times that
\nIndonesia must take actions to make sure provinces don't rack up
\nlarge debts and to maintain the independence of the central bank.<\/p>\n
A fund spokesman confirmed the report, which expanded on a
\nfund statement a week ago. The three-year, $5 billion IMF loan
\nprogram is a key sign of outside support for Indonesia's
\npolitically troubled regime.<\/p>\n
IMF support is watched closely by foreign investors as a
\nsignal that the country is making key economic policy
\nreforms.<\/p>\n
\"We've made a number of recommendations on how (the central
\nbank's) accountability and transparency could be strengthened
\nwithout compromising its independence,'' said IMF spokesman
\nThomas Dawson.<\/p>\n
With the former central bank director arrested on corruption
\ncharges, the government has pushed legislation to make it easier
\nto remove the bank's governor and make the bank report to the
\ngovernment and legislature. The fund has said those moves could
\nundermine its independent monetary policy.<\/p>\n
\"The process that might be under way -- if pursued and
\nimplemented -- could in a lasting way damage the independence of
\nBank Indonesia,'' Singh said.<\/p>\n
The IMF's criticisms come as the latest in a series of
\npolitical crises has hit Jakarta.<\/p>\n
Last week, parliament formally warned President Abdurrahman
\nWahid that his involvement in two corruption scandals violated
\nthe constitution and may lead to his impeachment.<\/p>",
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