Ending program an indication of success: IMF's Citrin

Ending program an indication of success: IMF's Citrin

The Jakarta Post, Jakarta

The International Monetary Fund (IMF) approves plans by the
government to end the fund's current bailout program when it
expires later this year, saying it indicates the success of the
program.

Daniel Citrin, senior advisor to the IMF Asia and Pacific
Department, said, "Ending the IMF program, if that's the course
the country takes, is a sign that recovery has reached a mature
phase."

"The country is now at a point where, upon the expiration of
the current IMF-supported program at the end of 2003, it may be
possible to forgo another arrangement with the IMF," Citrin told
the latest edition of IMFSurvey.

Under the IMF lending program, which started in 1998, the fund
has provided some US$5 billion in fresh loans, disbursed
periodically, pending the government's ability to meet a set of
phased economic reform targets.

As the program is set to expire by year-end, the government is
currently exploring options available to end the program, without
creating harmful consequences for the economy.

After a slow start, Citrin admitted that the government had
made significant progress in the implementation of the reform
programs over the past couple of years.

As a result, not only has the country's macroeconomic
situation been stabilizing -- as seen in benign inflation and a
strong showing of the rupiah -- the budget's fiscal
sustainability has also been maintained.

Progress has also been observed in the restructuring of the
country's banking sector, he added.

Lagging behind was the acceleration of reform in the legal
area, a discouraging factor for the return of investment to the
country, both foreign and domestic, badly needed to push economic
growth to a level that could generate more jobs for millions of
unemployed Indonesians, he said.

Now that the IMF was leaving, the country had to push through
legal reform and anticorruption measures, and make sure its labor
regulations and decentralization did not deter investors, Citrin
said.

With regard to the options available post-IMF, Citrin said the
fund would leave it all to the government, adding, "whatever our
formal relations may be, the IMF will do whatever it can to
support Indonesia."

"The most important thing is that Indonesia's policy course
needs to be what it is, with or without an IMF-supported program.
Ultimately, it's all about its policy and performance."

Without an IMF program, the country would lose its foreign
debt relief facilities from creditors grouped in the Paris Club,
which is willing to provide support only if an IMF program were
in place.