Boediono upbeat on meeting key IMF programs
Dadan Wijaksana, The Jakarta Post, Jakarta
Minister of Finance Boediono expressed optimism on Tuesday that the government would be able to meet a list of "prior actions" set out by the International Monetary Fund (IMF) as prerequisites for maintaining the Fund's support.
IMF officials are expected to arrive in Jakarta next month to review the country's economic reform program.
Obtaining the IMF's support is crucial for the government to land a favorable debt rescheduling scheme with the Paris Club of creditor nations in April.
"Prior actions are something the government must implement. But I'm convinced we'll be able to complete all that before too long," Boediono told reporters on the sidelines of a hearing with House of Representatives commission IX on financial affairs.
He did not elaborate on what the prior actions might be.
However, he confirmed that a credible process in the sale of the government's 51 percent stake in Bank Central Asia (BCA), and a clear strategy on how to resolve the huge debts owed by ex-bank owners to the government were included in the list.
While the BCA sale process is nearing its conclusion, the government is still divided over a controversial policy to ease the repayment terms of the ex bank owners' debts.
Many quarters have opposed the proposed debt settlement scheme, which seems to favor the former bank owners.
Besides these two, local media have quoted a source as saying that there were at least four more actions the government needed to carry out.
They are: the completion of a policy to allow fixed-rate bonds in Bank Niaga to be replaced by bonds carrying a variable interest rate, dilution of the share ownership of Eka Cipta Widjaja in his Bank Internasional Indonesia (BII), tax measures and the amendment of the central bank law.
Completing the prior actions is important to allow the government to secure a fresh deal with the IMF. The upcoming visit of the IMF team will not only review the ongoing reform program but would also jointly draft with the government the country's new letter of intent (LoI), which basically contains a set of economic reform program targets to be implemented by the government.
The government is to meet with the Paris Club of creditor nations in April to secure a rescheduling facility for sovereign debt maturing between April this year and December next year.
As in previous meetings, lending commitments from the creditors would come only after the IMF gave its consent to the country.
The Paris Club groups together the country's major sovereign creditors for talks on debt rescheduling. The April meeting would be its third.
The restructuring facilities are seen as crucial, for without them, the country would face an uphill task in achieving the 2002 budget deficit at a manageable 2.5 percent of the gross domestic product (GDP).
Debt relief would also provide the government a larger allocation for development spending, to help accelerate economic growth.
As for the exact amount of restructuring facilities, Boediono said the calculation was still underway and that he had yet to receive the final figure.
His statement denied previous report by The Jakarta Post quoting his aide Achmad Royadi as saying the government was seeking US$5 billion worth of debt rescheduling.
The government is currently shouldering a staggering $130 billion in total debt, or around 90 percent of GDP, of which $70 billion is external debt.