Government welcomes new IMF disbursement
Government welcomes new IMF disbursement
JAKARTA (JP): The government welcomed yesterday the International Monetary Fund (IMF) executive board's decision on Tuesday to disburse another US$1 billion in rescue funds and praised the new aid as another boost to strengthening the rupiah.
Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said yesterday the IMF aid, combined with returning confidence in the economy following the government's firm action against ailing banks last week, had contributed greatly to the strengthening of the rupiah against the dollar over the last three days.
The rupiah rose to about 11,100 early this week, its highest level since May when the currency fell to as low as 17,000.
"More encouraging is that the rupiah has been strengthening without any government market intervention," Ginandjar added.
The government has projected the rupiah will average 10,600 to the dollar during the current fiscal year which ends in March.
"Hopefully, the rupiah will gradually appreciate to 10,000 later this year. But we prefer a gradual strengthening to a sharp, but volatile rise, because sharp fluctuations may spark speculation," Ginandjar told reporters.
The IMF executive board approved Tuesday the next one-billion- dollar loan tranche to Indonesia as part of a $46 billion bailout package, and praised the nation's efforts to combat its economic crisis.
IMF Managing Director Michel Camdessus added in a statement late Tuesday in Washington that the IMF board approved better lending terms through an extended fund facility (EFF) for Indonesia totaling some $6.2 billion.
Camdessus was quoted by Dow Jones Newswires as saying that the EFF's "longer repayment period ... will allow time for the Indonesian reform program to take full effect, and will further strengthen the outlook for the balance of payments."
The EFF replaces a three-year standby credit approved last year, of which $4.9 billion has already been disbursed.
The move is "in response to the broadening of Indonesia's economic strategy in recent months ... to include a wide-ranging program of structural reforms," the IMF said.
The programs include the restructuring of the banking and corporate sectors, as well as the deregulation of monopolies, the privatization of state-owned companies and trade liberalization.
Camdessus said that the next disbursements of the loan to Indonesia were scheduled for Sept. 25, Oct. 25 and Nov. 25.
He added that the amount of credit available under the extended fund facility and its duration were identical to the stand-by credit they replace. However, the repayment period for financing under the extended fund facility was substantially longer, he stated.
The repayment period of the extended fund facility is between 4.5 years and 10 years, while the repayment period for standy-by credits is between 3.25 years and five years.
This will further strengthen the outlook for the balance of payments, which is already benefiting from substantial bilateral and multilateral external financing programs for the restructuring of the banking system and corporate debt to private creditors, he added.
On July 15, the IMF announced new aid commitments boosting the economic rescue package aimed at helping Indonesia revive its crippled economy, with aid from the Fund and other donors rising to at least $46 billion.
The IMF bailout program, initiated last year when Indonesia was struck hard by the regional economic crisis, was stalled first over the country's perceived unwillingness to follow reforms, and then by the rapid deterioration of the economy. (prb/vin)