Govt signs letter of progress to IMF

Govt signs letter of progress to IMF

Dadan Wijaksana
The Jakarta Post
Jakarta

The government signed on Tuesday a letter to the International
Monetary Fund (IMF) containing a set of reform targets met by the
country, paving the way for the disbursement of a US$340 million
loan tranche.

The letter was signed by Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti and Minister of Finance Boediono.

"This letter will be a basis for the next disbursement of the
IMF loan to Indonesia, to be discussed at the board of directors
meeting sometime at the end of this month," Dorodjatun said in a
press release.

He also expected the Paris Club to welcome the signing of the
letter.

The government is scheduled to meet with the Paris Club of
creditor nations in Paris on Thursday and Friday, to seek a
rescheduling facility for the country's $5.5 billion in sovereign
debts maturing between April 2002 and the end of December 2003.
Rescheduling the debts is crucial to limit this year's budget
deficit at 2.5 percent of gross domestic product.

The support of the IMF is seen as vital in obtaining the Paris
Club debt rescheduling facility.

The IMF is sponsoring the country's economic reform program
under a $5 billion loan package.

The press release from Dorodjatun said the letter to the IMF
confirmed an earlier understanding between the government and the
Fund that the country was making progress in the implementation
of reform programs, as outlined in the December 2001 letter of
intent (LoI).

Progress in the bank reform program includes the sale of
government shares in Bank Central Asia, the launch of the Bank
Niaga divestment plan and the completion of a framework to settle
problems at Bank Internasional Indonesia, the press release said.

Another important area of progress was the approval of the
government's 2002 privatization program by the House of
Representatives.

The government is expected to be questioned about the above
issues at the Paris Club negotiating table.

IMF Jakarta representative David Nellor said on Monday there
would be no significant obstacles for the government at the Paris
Club meeting due to progress in implementing key reform programs.

However, in spite of this progress, there are issues that
still must be addressed by the government.

Among these outstanding issues are the IMF's demand that
the government take sterner action against debtors who have
failed to repay their huge debts to the country.

In the wake of the economic crisis, some $60 billion was
channeled to banks owned by these recalcitrant debtors.

"The government is committed to take serious action against
former bank owners who fail to fulfill their obligations," the
press release said.