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)