ADB poverty loan not linked to IMF program: Official

ADB poverty loan not linked to IMF program: Official

JAKARTA (JP): Asian Development Bank (ADB) Indonesia
representative Jan Van Heeswijk said on Wednesday that its loan
for poverty reduction would not be linked to the International
Monetary Fund (IMF) reform program.

But Heeswijk said that the Manila-based multilateral
institution's loan for lending for policy reforms would be
disbursed only if the Indonesian government is committed to
reform agenda agreed with the IMF

"If there would be delay in the reforms in the financial and
macroeconomic sectors, it will be difficult for us to proceed
with lending for policy reforms. But our lending for projects
directly focused at poverty would continue," he told reporters on
the sidelines of a workshop.

The IMF delayed late last year the disbursement of its next
US$400 million loan tranche to the country due to the government
slow progress in the implementation of key reform program
particularly in the sale of government shares in Bank Central
Asia and Bank Niaga, and concern over the poor implementation of
new regional autonomy law and the government-proposed amendment
of the central bank law.

The delay in the IMF loan has prompted both the World Bank and
ADB to issue a stricter conditions for the disbursement of their
loans to Indonesia.

A significant reduction in lending from the two institutions
would seriously harm the country's state budget.

ADB said last week in its new "country operational strategy"
for Indonesia that it was prepared to lend Indonesia between
US$600 million and $1.2 billion a year over the next three years,
provided the government pressed ahead with key reforms.

The bank, however, did not give details on the specific
criteria it was setting up for Indonesia nor did it say to what
extent it would cut loans if they were not met.

The country borrowed about $1.2 billion from ADB annually
before the economic crisis started in middle of 1997. During the
crisis, lending commitments increased to $1.8 billion in 1998 and
$1.5 billion in 1999.

Elsewhere, Heeswijk expected the IMF to disburse its loan soon
as there had been a "narrowing of position" between the IMF and
the government over reform program.

"We would hope so, there has been a narrowing positions as I
understood," he said.

But he declined to speculate when the Fund would disburse its
loan.

The government recently agreed to the IMF demand to set up a
panel of international and domestic experts to provide input and
review the government proposed amendment of the central bank law.

The IMF has expressed concern that the amendment of the
central bank law would do harm to the independency of Bank
Indonesia in implementing monetary policy.

The government has also recently obtained approval from the
House of Representatives to sell its majority ownership in BCA
and Bank Niaga in the first semester of this year.

The sale program was supposed to be completed last year, but
it was delayed due to bad market condition at the time.

Over the issue of fiscal decentralization policy, the
government is expected to issue a decree banning regional
administration from making borrowing in the near future to
finance their new autonomy power.

Some government officials have said that the IMF was expected
to release the loan sometime in late April.

Heeswijk also said that Jakarta representatives of Indonesia's
major donors grouped in the so-called Consultative Group on
Indonesia (CGI) were expected to convene late in April.

ADB is a member of the CGI, which is coordinated by the World
Bank.

Heeswijk said that the final CGI meeting is expected to take
place in October of November.

But he said that it was not yet decided whether the CGI
meeting would take place in Jakarta or other country. (rei)