Camdessus approves IMF payments to RI

Camdessus approves IMF payments to RI

SINGAPORE (Reuters): International Monetary Fund (IMF) Managing Director Michel Camdessus said yesterday he had recommended the IMF resume bailout payments to Indonesia.

Camdessus told a news conference in Singapore he was convinced Indonesia was strongly committed to implementing the financial reform package it had agreed with the fund.

"We in the IMF consider this program, which is the program of Indonesia, credible, well-balanced and (think it) addresses the problem at root," he said.

"I had no hesitation in recommending to the executive board to approve the first disbursement."

The IMF is expected to approve a $1 billion loan payment to Jakarta later on Monday and plans to disburse a further $2 billion in June and July under a $40 billion package aimed at rescuing Indonesia's battered economy.

The plan has drawn criticism. Some U.S. politicians have said the IMF should link its loans to improvements in human rights. Others have cast doubt on Indonesia's commitment to carrying out reforms agreed with the fund.

The IMF has held three rounds of negotiations with Jakarta over the last six months.

The first two of these produced widely-publicized announcements of reform packages but subsequent complaints of lack of concrete action by the Indonesian government.

But Camdessus said he thought Indonesia would adhere to the latest program agreed with the IMF.

"What I observed in Indonesia was an extremely strong commitment on the part of the authorities to stick to the program," he said. "As far as the program is concerned...all the signals received are for a very strict implementation."

Asked if payments to Indonesia would be stopped if Jakarta failed to implement agreed reforms, Camdessus repeated his view that Indonesia would stick to the agreed reforms. But he added:

"If, further down the road...performance criteria were to be missed, it would not be a catastrophe. We would just sit down and negotiate," he said. "I am certain we could find a solution to the problem."

He said Asia will emerge from its crisis stronger and as a model for good policy making.

"The crisis is not yet over. But we are turning the corner," Camdessus said after opening a regional training institute, set up by Singapore and the IMF.

"We have distinctly turned the corner in Thailand and Korea," he added.

The IMF's managing director said reforms of financial markets and institutions being undertaken across the region would be painful but would leave Asia stronger and eventually able to return to the high rates of economic growth enjoyed before the economic crisis.

"Asia will again be a showcase, not just of high growth and sizable capital inflows...but of what countries can do to improve their policies, strengthen domestic institutions and governance, and thereby strengthen the foundations for sustained, high- quality growth," Camdessus earlier said in a speech to Asian central bankers and officials.

He said Asia had long been an example of the benefits of globalization. In 1996, the region attracted almost half the $235 billion in private capital flows to developing and transition economies.

Some of those flows had not been invested wisely, but moves towards globalization had allowed many Asian states to accelerate investment and growth and create more jobs, he said.