IMF's review to focus on three major issues<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) Director
\nfor Asia and Pacific Affairs Hubert Neiss said here yesterday
\nthat the fund's review of the Indonesian economic reform program
\nwould focus on three major issues this month, including the
\ncountry's crippled distribution system.<\/p>\n
Neiss said the rehabilitation of the banking system and the
\nsettlement of private sector debt were also of immediate concern
\nbecause they had a pivotal role to play in the recovery of
\nIndonesia's economy.<\/p>\n
\"It is very important that all Indonesian people have access
\nto essential commodities... that means stocks have to be there,\"
\nNeiss said after a 1.5 hour meeting with President B.J. Habibie
\nat the Bina Graha presidential office which was also attended by
\nPrabhan R. Narvekar, the IMF representative here.<\/p>\n
Neiss said they also discussed the additional US$6 billion
\nwhich was last week added to the original $43 billion IMF bailout
\npackage.<\/p>\n
Release of $1 billion loan installments will depend upon the
\nresults of monthly reviews of the program of reform which
\nIndonesia agreed to in exchange for the assistance. The monthly
\nreviews will continue until the end of this year.<\/p>\n
The IMF last week approved the immediate payment of $1
\nbillion, bringing the total funds which it has so far released to
\nIndonesia to $4.9 billion.<\/p>\n
The President reiterated his commitment to the IMF program
\nduring yesterday's meeting, and promised that he would take all
\nnecessary measures to see that reforms were implemented,
\nincluding in the politically sensitive banking sector, Neiss
\nsaid.<\/p>\n
Indonesia's ailing banks are regarded as one of the most
\nsensitive areas in which reforms must be introduced, and also one
\nof the most difficult.<\/p>\n
Massive runs on a number of Indonesian banks and mounting non-
\nperforming loans have pushed many banks into technical
\ninsolvency.<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) has pledged
\nthat by the end of July it will freeze, merge, recapitalize or
\nliquidate the six banks under its control for which audits have
\nbeen completed.<\/p>\n
At least 32 banks are now under the agency's supervision.<\/p>\n
Neiss noted that the President had given his full support to
\nwhatever measures were necessary to nurse the banking system back
\nto health.<\/p>\n
He said the IMF also wanted to ensure that Bank Indonesia
\nstopped giving liquidity support to problematic banks.<\/p>\n
The third focus of the review, corporate sector debt, would
\nonly be discussed in a preliminary capacity during this visit due
\nto the complexity of the issue, he said.<\/p>\n
Indonesian private sector companies owe $64 billion in foreign
\ndebt. Debtors and representatives of the Indonesian government
\nreached an agreement with creditors in Frankfurt in June to roll
\nover the debt.<\/p>\n
He said domestic banks were also likely to adopt a debt relief
\nplan similar to the Frankfurt agreement.<\/p>\n
He said he hoped the Indonesian people would remain patient
\nbecause the severity of the crisis meant that recovery could take
\na long time.<\/p>\n
\"However, if the government is steadfast in implementing this
\nprogram and if social and political stability is maintained, then
\nthere is a good chance that everything will go back to normal and
\nthat also includes the rupiah,\" he added. (prb)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imfs-review-to-focus-on-three-major-issues-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}