IMF urges government to speed up reform program<\/p>\n
Dadan Wijaksana, The Jakarta Post, Nusa Dua, Bali<\/p>\n
The International Monetary Fund (IMF) said Tuesday that though
\nIndonesia had been making progress in certain areas, its reform
\nagenda was unfinished, resulting in modest economic growth.<\/p>\n
IMF Asia Pacific region senior advisor Daniel Citrin
\nreiterated his view as outlined in his speech during the first
\nday of the Consultative Group on Indonesia (CGI) meeting here.<\/p>\n
The CGI groups the country's major foreign donors.<\/p>\n
"Growth, while positive, remains disappointing relative to the
\n6 percent pace needed to make significant inroads in reducing
\npoverty and unemployment", Citrin said.<\/p>\n
Citrin is also currently leading an IMF team to assess the
\ngovernment's reform program in return for a loan facility. He
\nsaid the IMF hoped to reach a new loan agreement with Indonesia
\nby the end of the first quarter under its $5-billion loan
\nprogram.<\/p>\n
Despite success in maintaining macroeconomic stability over
\nthe past year, Indonesia's growth still lags behind other crisis-
\nhit nations in the region.<\/p>\n
The remarkable steady and solid performance against the U.S.
\ndollar, relatively manageable inflation rate, and the declining
\ntrend of the Bank Indonesia benchmark interest rates have yet to
\noffset the setbacks in investment and export performances,
\nresulting in a lower than expected economic growth. After posting
\na 3.4 percent economic growth in 2001, the government is now
\nexpecting the economy to grow by 3.6 percent this year.<\/p>\n
The figures are deemed insignificant to deal with rising
\npoverty and unemployment in the country. The World Bank estimated
\npoverty in 2002 to reach 16 percent of the total 210 million
\npopulation in the country.<\/p>\n
The mediocre growth would also be insufficient to absorb the
\nestimated 2.5 million entering the workforce each year.<\/p>\n
Therefore, Citrin suggested the government focus its 2003
\nprogram on certain objectives: consolidating recent gains in
\nmacroeconomic stability, strengthening public debt sustainability
\nover the medium term, continuing to make progress in restoring a
\nsound banking sector capable of performing its critical financial
\nintermediation function and enhance the investment climate
\nthrough a range of reform measures.<\/p>\n
Thus, it would be essential for the government to begin
\ntackling more decisively the problems related to the investment
\nclimate.<\/p>\n
To overcome this, the most profound efforts to be done would
\nbe reform in the legal and judicial sector, deemed as critical to
\nproduce sustained improvements in the investment climate.<\/p>\n
Other efforts include, creating a sensible labor market policy
\nthat can strike a balance in meeting the interests of both
\nemployers and employees, ensuring regional autonomy does not
\ndiscourage investors and reformulating customs and tax
\nadministration.<\/p>\n
Despite the piles of homework, however, Citrin noted that the
\ngovernment had already laid some sound foundations to meeting
\nsuch challenges.<\/p>\n
To mention a few, he pointed out progress the government had
\nmade during the course of last year, such as maintaining fiscal
\nstability, further divestment and privatization programs.<\/p>",
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