Fischer sees resumption of RI loans
Fischer sees resumption of RI loans
TOKYO (Reuters): The International Monetary Fund (IMF) may be
able to resume disbursement of funds to aid Indonesia's battered
economy "reasonably soon", IMF First Deputy Managing Director
Stanley Fischer said yesterday.
Fischer told a symposium in Tokyo that an IMF mission would
return to Jakarta late this week or next week to resume talks on
a review of Indonesia's reform program, put on hold by recent
economic and political turmoil.
"The situation is especially difficult because of the
extraordinary devaluation of the rupiah. But now that the
political transition has taken place, there is a prospect of a
return to the IMF program taking place reasonably soon," Fischer
said.
Indonesia had received only a small slice of a $41.2 billion
IMF-led rescue package when desperately needed loans were stalled
by the political upheaval which led last month to the resignation
of long-time leader Soeharto and his replacement by protege B.J.
Habibie as president.
Weeks of social unrest and political upheaval have dragged the
crippled economy further into depression and the IMF says the
economic forecasts underpinning the reform program will have to
be redone.
"There is in place in Indonesia an exceptionally strong
economic team and it is likely that within a few days the IMF
mission will return, possibly at the end of this week, early next
week...to Jakarta to resume discussions on the completion of the
review of the program," Fischer said.
"It would require a renegotiation of the macroeconomic aspects
of the program, and that I expect will be done.
"And if things go as is reasonable to hope, it should be
possible to resume disbursements to Indonesia after the review
mission has reported back in a couple of weeks and after the
papers are processed and considered by the board of the IMF," he
added.
Fischer added that the IMF had already sent back its monetary
mission to Jakarta to assist in the reform of the banking system
and in carrying out a monetary system designed to keep inflation
from getting out of hand and to bring the battered rupiah
currency back to a "more reasonable value".
Talks among creditor bankers and Indonesian officials on
restructuring the nation's mountainous corporate debt had made
"important progress", Fischer said.
Fresh discussions are being held in Frankfurt this week.
"There is no question that negotiation has made important
progress in the last few weeks and is on a good track towards an
agreement, if not at this meeting, then at the next one," Fischer
said, adding that such a deal would remove one worry from the
foreign exchange market and allow the rupiah to strengthen.
"As that happens, I believe that confidence in the currency
will begin to come back to Indonesia and that we will then have
seen...that the first stage of the reform process, namely, the
restoration of confidence and stability of the currency, will
take place also in Indonesia. As that happens...interest rates
will come down," Fischer said.