IMF to delay aid until mid-May<\/p>\n
JAKARTA (JP): The government said on Wednesday it was working
\nall out to meet the targets of its reform measures as agreed with
\nthe International Monetary Fund (IMF), but hinted that the next
\nUS$400 million tranche of the IMF bailout fund could still be
\ndelayed.<\/p>\n
Chief economics minister Kwik Kian Gie said after a Cabinet
\nmeeting presided over by President Abdurrahman Wahid that there
\nwere still two days remaining before the March 31 deadline to
\nspeed up some of the reform programs.<\/p>\n
\"If there is any delay, it may be only for a few days,\" Kwik
\nadded.<\/p>\n
But the IMF chief representative here, John Dodsworth, said
\nlate on Wednesday afternoon the next disbursement could be
\ndelayed until mid-May from its original schedule of April 4.<\/p>\n
The Cabinet meeting, scheduled to discuss regular economic
\nissues, was dominated by the controversy over the IMF aid delay,
\nwhich was sparked on Tuesday by Abdurrahman's remark that the IMF
\nexecutive board would meet on April 15 to release the next
\ndisbursement of aid to Indonesia.<\/p>\n
Dodsworth immediately denied that such a meeting had been
\nscheduled. He even indicated that the next tranche could be
\ndelayed indefinitely due to slippages in many of the reform
\nmeasures.<\/p>\n
Kwik got the bad news after a meeting he had especially asked
\nfor with the IMF chief representative John Dodsworth late on
\nWednesday afternoon.<\/p>\n
The delay will not only be for a few days as he estimated, but
\nmost probably for six weeks.<\/p>\n
Dodsworth said after his talks with Kwik that the IMF board
\nmeeting would probably be delayed until the second week of May,
\nbut it really depended on the IMF review.<\/p>\n
\"We see that the review will be completed sometime in the
\nfirst half of April. And after the review, it needs about three
\nweeks until the executive board can meet,\" he said.<\/p>\n
He said the bulk of the structural measures as agreed to in
\nthe letter of intent were still outstanding, but added he
\nbelieved they could be implemented in the next two weeks.<\/p>\n
Dodsworth reiterated several top-priority programs, including
\ncorporate restructuring strategy and its framework, which should
\nbe in place by mid-April, recapitalization of state banks and
\nreform of the tax system.<\/p>\n
He also stressed the need for good procedures within IBRA for
\ndebt restructuring and a more effective bankruptcy court to deal
\nwith noncooperative debtors.<\/p>\n
The controversy over the IMF aid rattled the foreign exchange
\nmarket on Tuesday and Wednesday.<\/p>\n
Separately, the IMF stated in Washington on Tuesday
\nthat Indonesia had asked for more time to agree on the economic
\nreforms necessary for its next loan disbursement.<\/p>\n
The IMF said the timetable for the second loan disbursement
\nhad been put back at the request of the Indonesian government so
\nit could agree on how to comply with reforms demanded by the IMF.<\/p>\n
\"The government's economic team requested more time to reach
\nfull consensus on the corporate restructuring strategy, and to
\nadvance implementation in other areas of the programs,\" said
\nAnoop Singh, deputy director of the IMF's Asia and Pacific
\ndepartment.<\/p>\n
Finance minister Bambang Sudibyo, who accompanied Kwik at the
\nmedia conference, said a delay in IMF aid disbursement, if it
\noccurred, would not affect the state budget.<\/p>\n
\"But we would be in big trouble if the World Bank, Asian
\nDevelopment Bank or other creditors also held up their loan
\ndisbursements.<\/p>\n
\"There would also a big problem if Indonesia's meeting with
\nthe Paris Club of sovereign creditors scheduled for April 12 to
\nApril 13 to negotiate a rescheduling of $2.1 billion of our
\nforeign debts failed to materialize,\" Bambang added.<\/p>\n
The 2000 state budget for the April-December period envisages
\na smaller foreign debt burden, assuming that $2.1 billion in
\nforeign debts is rescheduled with the Paris Club creditors.<\/p>\n
Bambang said despite some problems with the reform programs,
\nthe IMF would not likely intervene and stop the debt rescheduling
\nmeeting.<\/p>\n
\"After all, IMF credibility is at stake here. If its bailout
\nprogram here fails, its reputation will be damaged,\" he added.<\/p>\n
Bambang nonetheless conceded that the timetable of the Paris
\nmeeting might be delayed until after a satisfactory review of
\nIndonesian reform programs by the IMF.<\/p>\n
Dodsworth cautioned last week that a delay in IMF aid might
\ncause difficulties for the Indonesian government to secure a deal
\nfrom the Paris Club.<\/p>\n
Cacuk Sudarijanto, chairman of the Indonesian Bank
\nRestructuring Agency (IBRA), who also attended the media
\nconference at the President's Bina Graha working office, said he
\nwould speed up the transfer of bad loans from state Bank Mandiri
\nand Banks BRI, BNI and BTN to IBRA before the March 31 deadline.<\/p>\n
Recapitalization<\/p>\n
Cacuk added that his staff were now working all out to
\ncomplete the recapitalization of Bank Niaga, Bank Bali, Bank
\nBukopin and Bank Danamon before the March 31 deadline agreed with
\nthe IMF.<\/p>\n
On the Rp 17 trillion revenue target IBRA has to transfer to
\nthe state coffers before March 31, Cacuk said his agency had
\nsurpassed the target by Rp 2.61 trillion, even though Rp 4.25
\ntrillion of the total would be transferred in the form of
\ntreasury bonds and the remainder in cash.<\/p>\n
Separately, House of Representatives Speaker Akbar Tandjung
\nblamed the probable delay in IMF aid on Abdurrahman's lack of
\nfocus on economic issues.<\/p>\n
\"The Cabinet is not solid and its economic team lacks
\noperational leadership,\" Akbar said.<\/p>\n
He therefore urged the President to focus on economic programs
\nand to refrain from making statements that caused uncertainty
\ninstead of clarification.<\/p>\n
\"The government should show a sense of crisis and a sense of
\nurgency,\" Akbar added.<\/p>\n
Economic analyst Sjahrir blamed the IMF disappointment mainly
\non the nonfunctioning judicial court, which he said allowed those
\nwith political influence or power to escape the law.<\/p>\n
\"The President has also been very slow in reforming the
\ngovernment bureaucracy. He instead is slowing down the decision
\nmaking process by setting up numerous councils of advisors,\"
\nSjahrir added. (prb\/udi\/bkm\/vin)<\/p>",
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