Government completes IMF reform target: Kwik

Government completes IMF reform target: Kwik

JAKARTA (JP): Coordinating Minister for the Economy, Finance
and Industry Kwik Kian Gie said on Tuesday that all reform
targets agreed upon with the International Monetary Fund (IMF)
had been finalized.

"We've already met the IMF's deadline," Kwik told reporters.

Kwik was commenting on an internal government deadline which
falls this Thursday, to implement all reform programs as set out
by the IMF.

Among the last reform tasks finalized by the government was
the replacement of all directors of state-owned Bank Rakyat
Indonesia (BRI), which was announced late Tuesday.

On Monday, the government spurred on to complete the
recapitalization of Bank Bali in a bid to meet the reform's
deadline.

The bank's recapitalization has been delayed due to a loan
scandal last year that centered on the transfer of US$80 million
under a questionable cessie agreement.

Other reform tasks include the recapitalization of BRI, Bank
Negara Indonesia (BNI), as well as a 1999 audit of the country's
central bank, Bank Indonesia.

IMF chief representative for Indonesia John R. Dodsworth told
news agency Dow Jones that the government should meet all reforms
under its latest Letter of Intent (LoI) to the IMF within the
"next few days".

The LoI contains the economic reform program. Indonesia's
compliance to the LoI is a prerequisite in obtaining the IMF's
financial bailout.

However, a volatile political climate has made it difficult
for the government to implement economic policies with market
sentiments reacting sensitively to any uncertainties.

The rupiah took a steep dive against the U.S. dollar in late
April, but had already been weakening since early this year
largely due to political uncertainties.

"The government is doing a good job of putting all of these
things into place in difficult circumstances," Dodsworth said.

The completion of the reforms is vital in securing a third
tranche of loans set for August, that may range between $380
million to $400 million.

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

Indonesia obtained the funds after meeting the requirements of
a second LoI in May and has thus far received $700 million from
the IMF.

The loan is part of the IMF's $5 billion financial bailout
package signed earlier this year to assist a three-year economic
development program for Indonesia. (bkm)