Fischer due in Jakarta for Indonesia-IMF talks

Fischer due in Jakarta for Indonesia-IMF talks

WASHINGTON (Dow Jones): Stanley Fischer, first deputy managing
director of the International Monetary Fund, will arrive Thursday
in Jakarta for meetings to review what could be the final details
of a reinvigorated economic program, an IMF official said
Tuesday.

The official, speaking Tuesday to Dow Jones Newswires on
condition of anonymity, said that Fischer is scheduled to depart
late Tuesday for the Indonesian capital where he expects to meet
with President Soeharto's new economic team.

Fischer is also expected to review ongoing efforts to
restructure more than US$60 billion in short-term external
private-sector debts.

But the IMF's role in the debt workout effort, IMF and World
Bank officials have said, is focused around keeping tabs on
potential costs to the Indonesian government and doesn't involve
any official IMF money flowing into any scheme.

Besides fleshing out basic understandings over how Indonesia
will handle its private sector debt troubles, the next big step
in IMF-Indonesia relations will be the signing of a letter of
intent fleshing out economic goals for the months ahead.

Without a fresh letter of commitment, the IMF won't be in a
position to release a delayed $3 billion outlay from an existing
$10.1 billion standby credit arrangement with Indonesia.

After the letter is signed, it is expected that the IMF
executive board wouldn't take up the outlay issue for two weeks.

However, it isn't yet clear if the letter of intent will be
signed later this week when Fischer arrives in Jakarta, although
IMF officials generally are signaling positive movement in
dealings with the Soeharto government.

U.S. Treasury Secretary Robert Rubin declined to predict how
the current talks between the IMF and Indonesia could turn out,
saying the negotiations are ongoing.

However, the Rubin noted that David Lipton, a Treasury
undersecretary, apparently made progress in talks he held with
Indonesian officials recently.

"David Lipton, our undersecretary, did go to Indonesia. The
Indonesians have told me in several conversations that it was an
extremely constructive trip. He helped work through with them an
outline, or a framework, if you will, for thinking through the
discussions with respect to reform in Indonesia," Rubin said.

Australia's Foreign Minister Alexander Downer said yesterday
he expected an announcement soon on a delayed $3 billion payment
to Indonesia under an International Monetary Fund-led assistance
package.

"It's pleasing to see there are positive signals now emerging
that Indonesia and the IMF are working constructively together
and we would expect an announcement soon," Downer told the
Australian Parliament, referring to the delayed second payment
under the IMF package.