Indonesia signs accord with IMF, clearing way for new loans<\/p>\n
JAKARTA (JP): The government and Bank Indonesia signed a new
\nagreement with the International Monetary Fund (IMF) on Thursday,
\nclearing the way for the fund to resume financial support to the
\ncountry.<\/p>\n
In the Memorandum of Economic and Financial Policies, the
\ngovernment promised to undertake ambitious structural reforms in
\nnumerous areas, including the banking system; fiscal and trade
\npolicies; fiscal decentralization; corporate restructuring; legal
\nreform and governance; the energy sector; investment policy;
\nagriculture policy and forestry.<\/p>\n
The agreement also detailed corrective measures for Bank
\nIndonesia, including clarifying the central bank's financial
\nposition, improving its internal controls and strengthening its
\nsupervision standards.<\/p>\n
Following the signing of the agreement, the IMF's executive
\nboard is expected to meet on Feb. 4 to approve a total of US$5
\nbillion in loans to Indonesia to finance its reform program over
\nthe next three years, IMF Indonesia representative John Dodsworth
\nsaid.<\/p>\n
Speaking to journalists after the agreement was signed,
\nDodsworth said the IMF would likely release the first installment
\nof the loans, amounting to $400 million, the same day as the
\nmeeting.<\/p>\n
\"We are ready to go ahead now,\" Dodsworth said. \"I think we
\nwould be wrong to hold up support for the new government because
\nof faults of the past.\"<\/p>\n
The IMF suspended loans to Indonesia last September after
\ninternational confidence in the country plummeted in the wake of
\nthe high-profile Bank Bali corruption scandal, which allegedly
\ninvolved members of former president B.J. Habibie's inner circle.<\/p>\n
Dodsworth said the IMF was satisfied with the government's
\ninvestigation of the Bank Bali case.<\/p>\n
In the new agreement, the government said its investigation of
\nthe Bank Bali scandal was \"being credibly advanced\" and that it
\nwas improving governance in the banking system to prevent a
\nrecurrence of the scandal.<\/p>\n
In another move to improve the supervision of commercial
\nbanks, Bank Indonesia will provide the IMF with monthly bank-by-
\nbank data beginning with data from the end of December 1999, as
\nstipulated in the memorandum.<\/p>\n
The government and BI forecast that the banking system would
\nbe restored to health by the end of 2001, with all existing banks
\nhaving a minimum capital adequacy ratio of 8 percent.<\/p>\n
To enhance transparency in the Indonesian Bank Restructuring
\nAgency, the government agreed to have the agency audited. The
\nresult of the audit, which will cover IBRA's status as of
\nDecember 1999, will be published by the end of April. This will
\nbe followed by regular quarterly and annual audited financial
\nstatements.<\/p>\n
In its trade policy, the government pledged to continue
\ncutting import tariffs so that by the end of 2003, Indonesia
\nwould have a three-tiered tariff structure of zero percent, 5
\npercent and 10 percent for all goods, excluding alcohol and
\nautomobiles.<\/p>\n
The government also said it had developed a strategy to
\nprovide fresh momentum to corporate restructuring, which would
\nactively involve both IBRA and the Jakarta Initiative Task Force.<\/p>\n
Cases which cannot be handled expeditiously by IBRA will be
\ntransferred to the task force. If the process then continues to
\nmove too slowly, the cases may be referred to the Attorney
\nGeneral's Office for the initiation of bankruptcy proceedings.<\/p>\n
According to the memorandum, the bankruptcy court's reputation
\nfor corruption has damaged confidence in the legal system and
\nhalted crucial corporate restructuring.<\/p>\n
In a bid to address this problem, the government will enhance
\nthe role of the Attorney General's Office, reform the court
\nsystem and seek parliamentary approval for all appointments to
\nthe Supreme Court.<\/p>\n
In addition to structural reforms, the government's medium-
\nterm policy will be focused around four main pillars: ensuring
\nprice stability, revamping bank and corporate restructuring,
\nrebuilding Indonesia's institutions and improving the management
\nof natural resources.<\/p>\n
The government is also committed to maintaining strong
\nmacroeconomic policies in order to achieve the targeted economic
\ngrowth of between 3 percent and 4 percent in the 2000 budget
\nyear, and between 5 percent and 6 percent in the medium term.
\n(rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-signs-accord-with-imf-clearing-way-for-new-loans-1447893297",
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