Govt to complete key talks with IMF today
Dadan Wijaksana and Berni K. Moestafa, The Jakarta Post, Jakarta
After weeks of intense discussion, the government and the visiting International Monetary Fund (IMF) mission team are expected to complete the assessment of the country's economic condition and reform programs on Tuesday.
"(The discussion) has been going well, but it's not finalized just yet. We'll still have a chance to meet tomorrow, we'll wrap it up all by then," Finance Minister Boediono told reporters late on Monday following a meeting between key economic ministers and the IMF team.
He declined to provide further details.
A special mission of the IMF, led by the Fund's senior adviser for the Asia Pacific department Daniel Citrin, has been in Jakarta for two weeks not only to review the country's latest economic condition, but also together with the government to draft Indonesia's fourth letter of intent (LoI).
The LoI, in this case, is a set of economic targets and reform programs which must be achieved and implemented by the government within a certain period of time to qualify for further loans under the IMF's structural adjustment program.
The draft of the LoI will be brought to the IMF board of directors in Washington for approval, which will pave the way for the disbursement of the Fund's next US$400 million loan tranche.
The government expects the IMF to make the next loan disbursement later this year. The disbursement of the IMF money is crucial to help revive investor confidence in the ailing economy.
Indonesia has so far received around $1.2 billion out of the $5 billion loan program agreed upon in late 1999.
Meanwhile, State Minister of State Enterprises Laksamana Sukardi also confirmed the smooth process of the discussions, saying that so far there had been nothing that could lead to any disagreement.
Among the economic targets set for the fourth LoI, according to sources, were an economic growth target of 3-4 percent for 2002, inflation of 9-10 percent and Rp 42.5 trillion ($4 billion) proceeds from the sale of assets under the Indonesian Bank Restructuring Agency (IBRA).
Earlier, a Bank Indonesia (BI) senior official said that one important item to be included in the LoI was a plan to launch a new investigation into alleged misuse of some Rp 138.4 trillion in BI emergency loans.
The case centers around the central bank's liquidity support to 48 local banks during the peak of the 1997 financial crisis.
Although two separate investigations have been conducted in the case, they yielded neither prosecutions nor the repayment of the loans.
Meanwhile, regional banking analyst Lin Che Wei at SG Securities warned the move might stir legal uncertainties for debtors under IBRA.
"The implications of this (probe) can spread everywhere," he told The Jakarta Post.
Any follow-up on the probe will inevitably lead to reviewing IBRA's Master of Settlement and Acquisition Agreements (MSAA) - a deal requiring bank owners to surrender assets to IBRA as collateral for their debts to the government.
He said forcing debtors to transfer more assets despite the MSAA, would hurt debtors' rights guaranteed in that document.
Che Wei said the government should realize that the loan abuse case may not get resolved within a short time. It must also know the consequences if this were to become an item on the next LoI.