FSPC to submit new reform program by July 30: Kwik

JAKARTA (JP): Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie said on Thursday that the government was drafting its third reform program, to be submitted to the International Monetary Fund (IMF) on July 30.

"We've practically completed the second LoI (letter of intent) and are moving on to drafting the third economic reform program," Kwik told reporters following a hearing between the House of Representatives and President Abdurrahman Wahid.

The government's new economic reform programs, if approved by the IMF, would be included in the new LoI, which would be used by the agency as the base for its loan disbursement to Indonesia.

"We will announce the draft of the economic reform program to the public and the IMF on July 30," he said.

Speaking to reporters on the sidelines a hearing with President Abdurrahman Wahid at the House of Representatives, Kwik said he would soon write a letter to the IMF to notify officials that the government had completed the reform targets under the second LoI.

The government has just finalized the reform tasks as set out in the second LoI, scheduled for completion on July 20.

"July 20 was our estimated target; there remain only minor tasks uncompleted," he said. But he added that the completion of the remaining tasks fell outside his authority.

Among the tasks which have not been completed are legal proceedings against several bank owners to be carried out by the Attorney General's Office.

Others include the divestment of the government's stake in nationalized Bank Niaga and Bank Central Asia (BCA), which is awaiting the House's approval.

However, he added, he was not concerned when the IMF would actually disburse the loan.

"It is not important when the IMF decides to disburse the loan, because we don't need it at the moment because the country's foreign exchange is still sufficient," he said.

Kwik said that the government was entitled to use the fund's loans only to cover the payment deficit in its current 2000 state budget.

The IMF has disbursed US$700 million this year, as part of a $5 billion financial bailout package under a three-year economic development program.

The government failed to meet this year's first LoI deadline in April, prompting the IMF to delay the disbursement of its second tranche of $400 million in loans to May, from the initial schedule of April.

The second LoI demanded, among others things, the full 1999 audits on Bank Indonesia and the Indonesian Bank Restructuring Agency (IBRA).

IBRA is in charge of recovering bad loans and selling nationalized assets formerly owned by the country's ailing banks.

The agency currently controls some Rp 600 trillion ($66 billion) in nationalized assets.

Some of the completed reform tasks were difficult to meet on schedule, like the decision to recapitalize Bank Bali, which was at the center of a major loan scandal.

Another last minute decision late on Tuesday was the replacement of Bank Rakyat Indonesia's (BRI) top management.

BRI's management reshuffle paved the way for the bank's recapitalization program.

"I again emphasize that July 20 is an internal deadline so that the debacle with the first LoI will not happen again," Kwik said.

Minister of Finance Bambang Sudibyo also said that there was no pressure from the IMF to complete reform tasks by July 20.

"The IMF is not forcing us to sign the LoI today," he said.

Bambang said that since Bank Niaga and BCA were still under the government's recapitalization program, their divestment required the House's approval.

He expected the House to make a decision Friday (today), including on how much the government could divest its of stake in the two nationalized banks.

"After that, it will probably take about three to four days to finalize some technical details," he added. (bkm)