Government not seeking major changes in reform program

Government not seeking major changes in reform program

JAKARTA (JP): The Cabinet's new economic team is not seeking
major changes in the International Monetary Fund-sponsored
economic reform program, Bank Indonesia acting governor Anwar
Nasution said here on Thursday.

"There will be no major changes in the (IMF) program," he said
following a meeting between the new economic ministers and
representatives of multilateral institutions, including the IMF.

Anwar did not specify what changes would be made, but he said
government spending would focus on empowering the poor and
developing infrastructure in rural areas.

"The changes don't mean go to hell with the IMF," he said. "It
is entirely wrong for you to label Rizal as anti-IMF. He's a pro-
market person just like me," he added, referring to Coordinating
Minister for the Economy Rizal Ramli.

Rizal's past criticism of the IMF-supervised economic reform
program has earned him the reputation of being anti-IMF.

Soon after his appointment as the country's new economic czar
last Thursday, Rizal said he wanted to see some changes in the
IMF economic program and in the role of multilateral institutions
in the country.

In a phone conversation with IMF deputy managing director
Stanley Fisher earlier this week, Rizal again expressed his
intention to review the reform package because conditions had
changed considerably since the last review of the program was
undertaken in June.

Talk of changes to the IMF-sponsored economic program has
unnerved the financial market over the past several days, causing
the rupiah to decline against the U.S. dollar, albeit slightly.

But most analysts believe the government will not make major
changes to the reform program.

The deputy director for the IMF in Asia Pacific, Anoop Singh,
arrived in Jakarta on Wednesday to discuss with Rizal and other
members of the economic team the planned changes.

But Singh declined on Thursday to comment on the meetings,
saying he would hold further discussions with Rizal on Friday.

Singh, however, did say the IMF and the new economic team had
reached a "basic agreement".

In a joint media conference with representatives of
multilateral institutions, Rizal said the Cabinet's new economic
team remained committed to the IMF reform program and would even
step-up its implementation to accelerate the country's economic
recovery.

"There's a new enthusiasm that Indonesia can recover quickly
with the support of multilateral institutions .... We are looking
forward to an improved implementation of the program," he said.

In response to Rizal's statements, Singh said: "You told us
that you want to accelerate Indonesia's recovery; we support
this.

"Second, you have told us that you intend to intensify the
implementation of the economic program ... we support this.

"You want to increase ownership of the program; we support
this .... We want to convince you that the IMF will fully support
the new economic team," Singh said.

The World Bank country director for Indonesia, Mark Baird,
said: "It's clearly very important for Indonesia to push ahead
with the implementation of the reform program as quickly as
possible ... particularly in corporate restructuring.

"I think what would come from this is not only growing
confidence in the market that Indonesia is on the path of
recovery, but also a real benefit to the people of Indonesia.

Anwar said a delay in the next disbursement of the IMF loan to
the country would not affect Indonesia's balance of payment.

"I think any delay of the IMF board meeting would only be
around two weeks. It's surely not the end of the world for us,"
he said.

Rizal has asked the IMF to delay its board meeting, initially
scheduled for Thursday, to allow the new economic team to study
the letter of intent (LoI) sent to the IMF by the previous
economic team in late July.

Rizal said the new team wanted to study the conditions of the
LoI in order to work out a plan to increase the country's
ownership of the program.

The IMF board must approve the LoI, which basically outlines
the economic programs to be implemented by the government within
a certain time period, before it disburse its next loan tranche
of about US$400 million.

The IMF pledged in January some $5 billion in bailout funds to
help finance the country's three-year economic reform program.
So far, the IMF has disbursed about $700 million of this promised
money.

Separately, noted economist Emil Salim supported Rizal's
intention to review the present economic reform program.

"The present LoI was signed by the old economic team. Rizal's
team is new, so it's only normal that he would want to review the
agreement," he said.

He added that economic conditions had changed since the
previous economic team and the IMF signed the LoI. (rei/bkm)