Boediono upbeat on meeting key IMF programs

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.