New IMF loan shows confidence in RI reform program: Experts<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
In spite of the lukewarm reaction from the financial market,
\nrecent approval from the International Monetary Fund (IMF) to
\ndisburse its latest loan tranche to Indonesia reflects the Fund's
\ncontinued confidence on the country's economy, experts said.<\/p>\n
The approval shows that the country's economic reform program
\nbeing carried out under close supervision of the IMF was on
\ntrack, StanChart economist Fauzi Ichsan said on Monday.<\/p>\n
"That is still good news as it means we're moving in the right
\ndirection," Fauzi told The Jakarta Post.<\/p>\n
Late last week, the IMF approved a fresh loan worth US$469
\nmillion to Indonesia to bring its total lending to about $3.5
\nbillion under the current $5 billion loan program for the
\ncountry. The approval was made possible after the IMF board of
\nexecutives endorsed the country's new economic reform programs
\nand targets.<\/p>\n
But that failed to draw attention from the financial market,
\nas seen in the performance of the rupiah. On Monday, the local
\ncurrency closed unchanged at Rp 8,905 against the U.S. dollar
\ncompared to Friday's closing.<\/p>\n
"It had little impact on the market because everybody is
\nfocusing on the ongoing war. That's what mostly is driving the
\nrupiah's movement at the moment," Fauzi said.<\/p>\n
Currency analyst Pardi Kendi shared Fauzi's views that the
\napproval would have little impact on the rupiah as the IMF is
\ncurrently no longer the factor weighting on the market's
\nconfidence.<\/p>\n
"The day-to-day developments in the Iraq war have been the
\ndominant force driving the rupiah, and will remain so in the near
\nfuture. The IMF approval will do little to support the rupiah,"
\nPardi told the post.<\/p>\n
However, the two were of the opinion that the lukewarm
\nreaction to the loan approval did not negate the message behind
\nit.<\/p>\n
It should carry the message that Indonesia needs to speed up
\nefforts in improving the domestic investment climate, which has
\nbeen the main obstacle in generating economic growth, Fauzi said.<\/p>\n
The IMF, while noting continued stability in the country's
\nmacro-economic indicators -- such as the exchange rate, inflation
\nand Bank Indonesia's interest rates -- also stressed the need for
\nfurther reform especially in the legal and judicial area.<\/p>\n
"Sustained efforts for further reform will be necessary in the
\ncontext of the 2003 program to lay the basis for more rapid
\neconomic growth," Anne Krueger, IMF first deputy managing
\ndirector said, when the approval was announced.<\/p>\n
The IMF loan program is tied to the government's commitment in
\nimplementing its economic structural reforms.<\/p>\n
The IMF program was started in 2000 after the country was hit
\nby the financial crisis in late 1990s with Indonesia planning not
\nto renew the program when it expires at the end of this year.<\/p>\n
She added that Indonesia needed to reinforce its financial
\nsystem.<\/p>\n
"Strengthening the financial sector is a central element of
\nthe program ... further steps are required to strengthen
\nmonitoring, governance and accountability of state banks as they
\nprepare for divestment."<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-imf-loan-shows-confidence-in-ri-reform-program-experts-1447893297",
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"sponsor": "Okusi Associates",
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