FSPC to submit new reform program by July 30: Kwik
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)