Government expects IMF to disburse loan in August
JAKARTA (JP): The government said on Monday it expected the International Monetary Fund (IMF) to disburse its long-delayed US$400 million loan tranche by August.
Coordinating Minister for the Economy Burhanuddin Abdullah said the IMF mission would be able to finalize its review of Indonesia's progress with economic reform by Friday.
"Therefore, we are quite optimistic that the third loan tranche will be disbursed in August," he stated, after attending a Cabinet meeting chaired by Vice President Megawati Soekarnoputri.
Burhanuddin's confidence came amid concern that the IMF might continue to hold up its loan until Indonesia resolved the political uncertainty regarding President Abdurrahman Wahid's leadership.
A new president and new government are expected to emerge from the special session of the People's Consultative Assembly early next month that is widely expected to go ahead with its motion to impeach President Abdurrahman.
Burhanuddin earlier said the government wanted to speed up negotiations with the IMF in anticipation of the Assembly's special session.
The IMF special team arrived here last week to work on a new Letter of Intent (LoI) with the government, to replace the old one signed last September.
Led by the fund's Asia Pacific deputy director Anoop Singh, the visit of the review team has signaled the end of the IMF's six-month loan suspension to Indonesia.
IMF held up a $400 million loan package to Indonesia last December after the government missed several of its reform targets, as stipulated in the September LoI.
The government postponed the divestment of its shares in Bank Central Asia (BCA) and Bank Niaga, even though their sales were specific LoI targets.
Plans to allow regional administrations to issue bonds drew criticism from the IMF, on the grounds that they would burden the state budget.
Concern also arose on plans to amend the central bank law, a move the IMF saw as jeopardizing Bank Indonesia's independence.
Indonesia then promised to divest BCA and Bank Niaga this year, deferred plans to allow regional administrations to issue bonds, and included IMF experts in discussions over the amendment of the central bank law.
The signing of a new LoI is a precondition for disbursement of the $400 million loan tranche.
Burhanuddin said that current talks between the IMF and the government were running smoothly.
"We're talking about technical details and numbers, so this represents quite some progress. Everything is proceeding as we expected it would," he said.
Meanwhile, Finance Minister Rizal Ramli said the government would go ahead with the plan to acquire publicly listed PT Bank Internasional Indonesia (BII) by state-owned Bank Mandiri.
He was responding to reports that the IMF had warned the government of the risks Bank Mandiri might face with the acquisition.
Analysts have also warned that an acquisition is now untimely, saying that Bank Mandiri, the country's largest bank that resulted from the merger of four state banks in 1999, is still struggling to consolidate its operations after the merger process and recapitalization.
"They (the IMF) only asked for clarification, explanations on certain steps, and why the option had been chosen," he said.
Most analysts saw the acquisition as an effort to bail out BII from bankruptcy.(bkm/dja)