Government optimistic about meeting IMF's new deadline

JAKARTA (JP): The government said on Saturday it was confident it would meet the new deadline set by the International Monetary Fund (IMF) to complete key economic reforms.

Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie said the government must complete the implementation of some 42 key economic measures as a prerequisite for the disbursement of US$400 million in bailout funds from the IMF.

"I am optimistic the ministries responsible for the implementation of the 42 items will complete their tasks right on time," he told journalists before a Cabinet meeting presided over by President Abdurrahman Wahid to review the progress in implementing the economic reforms.

Kwik did not specify what these 42 economic measures were, but said they particularly focused on bank and corporate restructuring programs.

The administration of President Abdurrahman Wahid signed a letter of intent with the IMF on Jan. 20, in which it promised to complete a host of ambitious economic measures by the end of March.

But many of the key programs were not completed by the deadline, prompting the IMF to delay the disbursement of the $400 million, which was scheduled to be released on April 4.

The money is part of a $5 billion loan package promised in January by the IMF to finance the country's economic reform programs.

Abdurrahman forbade his ministers from traveling overseas on Thursday until they reached an agreement with the IMF on a new deadline.

Kwik said the IMF was now expected to disburse part of the loan in May. He added that the delay in the disbursement of the IMF money had no significant impact on the government's finances, but stressed that the completion of the economic reforms was crucial to reviving confidence in the ailing economy.

"Our balance of payment is adequate for the next six months," he said.

But he said completing the IMF programs was vital to the success of the planned meeting between the government and the Paris Club of creditor nations on April 12 and April 13.

The government has said it intends to reschedule some $2.1 billion of the country's overseas loans to help ease the pressure on the 2000 state budget.

A green light from the IMF is seen as pivotal in securing an agreement from the Paris Club on the debt rescheduling.

"The economic team must accomplish all the required steps before April 12 in order to help smooth the negotiations," he said.

Kwik also said the IMF had advanced the deadline on several key reform measures. He said a number of programs that were originally to be completed by April 12 had been brought forward to April 8, while other programs initially scheduled for completion at the end of April were moved forward to April 21. He did not provide details on these programs.

But according to a report prepared by Kwik for the Cabinet meeting, programs that must be completed on April 12 include the recapitalization of state Bank Negara Indonesia and the finalization of steps to develop a secondary market for government T-bonds.

The report discussed other key measures that were given new deadlines for completion.

Among these are steps which must be carried out by the Ministry of Finance, including signing the final working contract and finishing the recapitalization of state Bank Mandiri by April 12; forming a team to develop strategies for state Bank Tabungan Negara by April 12; and issuing a decree to cut back the exemption on import duties for capital goods by April 16.

The report also said the Indonesian Bank Restructuring Agency (IBRA) must take legal measures against noncooperative debtors and settle the obligations of owners of banks closed down by the government in 1998.

It added that IBRA must take legal action against noncooperative former bank owners. (prb/cst/rei)