Govt expects 'smooth' talks with IMF
Govt expects 'smooth' talks with IMF
JAKARTA (JP): Coordinating Minister for the Economy
Burhanuddin Abdullah expressed optimism on Wednesday that the
much-awaited economic talks with the International Monetary Fund
(IMF), scheduled to start on Thursday, would run well and
encourage the IMF to disburse its crucial loan tranche to the
country.
Burhanuddin said that the IMF special mission, led Asia
Pacific deputy director Anoop Singh, was expected to arrive in
Jakarta on Thursday for a nine-day visit.
"I think this will proceed smoothly," he said following a
Cabinet meeting with Vice President Megawati Soekarnoputri.
"We hope to have an effective discussion because the IMF team
will only be here for eight to nine days," he added.
Burhanuddin said that negotiations with the IMF team would
focus on measures to achieve macroeconomic and monetary
stability.
He added that the fund would also talk to the Indonesian Bank
Restructuring Agency (IBRA) and the Jakarta Initiative Task Force
(JITF).
He expected that an agreement could be reached at the end of
the nine-day visit, so that it could be brought before the IMF
executive board in Washington for approval, a condition for
disbursement of the IMF's US$400 million loan tranche.
The IMF is providing the country with a $5 billion bailout
loan, however, disbursement of its fourth loan tranche was
suspended late last year amid signs that the government was
wavering with the implementation of agreed economic reforms.
The delay in disbursement of the IMF loan installment has
further eroded confidence in the ailing economy and jeopardizes
last year's agreement reached between the government and the
Paris Club of creditor nations for the rescheduling of
Indonesia's sovereign debts maturing in 2001.
In a bid to mend relations with the IMF, President Abdurrahman
Wahid appointed Burhanuddin last month as the new economics
minister, replacing Rizal Ramli who was appointed finance
minister.
Unlike his predecessor, Burhanuddin, previously a deputy
governor of Bank Indonesia with several years experience working
at the IMF, believes that the IMF's role is crucial in helping
the country's dilapidated economy recover.
The government and the IMF also recently agreed to
temporarily sideline their differences over the controversial
Bank Indonesia law amendment.
Burhanuddin said that the IMF mission would not touch on the
issue of the central bank law amendment.
He said that discussing the central bank law would need a
longer timeframe in order to achieve a satisfactory outcome.
"More time is needed to study (the proposed amendment) so that
we can obtain good results," he said.
The government-proposed amendment of the central bank law had
been a major sticking point between Indonesia and the IMF. The
government insisted that the amendment was needed to improve the
accountability of Bank Indonesia, while the IMF feared that it
would jeopardize the hard-won independence of the central bank.
The main point of dispute centers on Article 75 of the bill,
which stipulates that the existing Bank Indonesia board of
governors must step down once the bill becomes effective. The IMF
has said that this amounts to political intervention.
Meanwhile, IMF Jakarta representative John Dodsworth was
quoted as saying by Reuters on Wednesday, that it could take
several months to reach agreement with the government regarding
the central bank law changes, but added that there had been
sufficient compromise to break a six-month standoff.
"The compromise is about taking more time ... there is still
no compromise on the actual solution. That will come later,"
Dodsworth said.
He explained that the government would be working in
consultation with the IMF and the legislature over the next six
months to devise amendments to the central bank law that were
mutually acceptable.
Asked whether this week's IMF mission would lead to the
disbursement of the fund's loan tranche, he said: "That's why the
mission is coming, to facilitate the disbursement of the next
tranche." (rei/prb)