Dorodjatun confirms RI ready to end IMF program

Dorodjatun confirms RI ready to end IMF program

Fabiola Desy Unidjaja and Fitri Wulandari, The Jakarta Post,
Jakarta

Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti
confirmed on Monday that the government was ready to end the
existing International Monetary Fund economic bailout program.

He said that looking at the positive developments in a number
of key economic indicators, he was convinced that the economy
would be able to survive the post IMF period.

"The Indonesian government has the right to end the program
with the IMF as mandated by the People's Consultative Assembly
(MPR)," Dorodjatun told reporters after a meeting with Vice
President Hamzah Haz and a special government team assigned to
evaluate exit strategy options from the current IMF program.

"The government has prepared strategies for the future not
only for the 2004 state budget, but also a mid-term strategy," he
added.

Dorodjatun's statement came only a few days after Vice
President Hamzah Haz stressed the government's determination to
end the five-year IMF program. This was the first official
statement on the issue.

Since the MPR issued a decree suggesting that the government
not extend the current IMF program when it expires later this
year, there has been hot public debate on whether the government
should end the program or extend it for another short period
given the financial consequences of the first alternative to the
state budget and the economy.

Some analysts have said that without the presence of the IMF
in designing and monitoring the country's economic reform
program, Indonesia would no longer be able to obtain debt
rescheduling facilities from both the Paris Club of creditor
nations and the London Club of private creditors. Next year
alone, the country must repay some $3 billion in debts to the
foreign creditors. This would create a serious fiscal gap and
thus affect the performance of the overall economy.

But Dorodjatun said that the government was now more confident
about parting with the IMF amid several positive indicators in
the economy.

He pointed out on the significant increase in foreign exchange
reserves now standing at around $33 billion; and the relatively
stable exchange rate of the rupiah against the U.S. dollar.

He added that the country's small and medium-sized enterprises
would also receive a total of Rp 42 trillion in loans from the
central bank, much higher than Rp 30 trillion allocated for last
year. This should help push economic growth.

"The government is safeguarding the economic momentum and
positive record so that economic growth will continue to be
positive and better ahead of the 2004 general election,"
Dorodjatun said.

Minister of Finance Boediono acknowledged that exiting from
the IMF program would cause a fiscal gap, saying that his office
and the central bank were still calculating the cost to the state
budget.

"There will be financial gap, and Bank Indonesia is
calculating it to make a projection and preparations," Boediono
said.

Neither Dorodjatun nor Boediono, however, would say whether
the country would still invite the IMF to play a monitoring role
or would completely break away from the Fund.

IMF presence for the last five year has been important to
maintain international creditors and investors.

Economists have urged that Indonesia join the IMF post-program
monitoring arrangement. Under the arrangement, the Fund will
monitor the government's self-designed economic reform program
and not design it as it does at present.