Govt to get $450 million from IMF
Govt to get $450 million from IMF
Dadan Wijaksana, The Jakarta Post, Jakarta
Following two weeks of discussion, the government and the
International Monetary Fund (IMF) wrapped up on Thursday the
country's new economic reform programs, outlined under the eighth
letter of intent (LoI), to clear the way for the disbursement of
some US$450 million in IMF loan.
Under the reform programs, the government must increasingly
focus on speeding up growth and making significant inroads into
reducing poverty and unemployment, the fund said in a media
release.
It also added that there was agreement on overriding
priorities -- consolidating gains in macroeconomic stability,
strengthening public debt sustainability over the medium term,
continuing progress in restoring a sound banking sector and
improving the investment climate.
"With strong implementation, the mission team believes these
policies will help attain the overarching goals of boosting
economic growth and reducing poverty in Indonesia," the statement
said.
Consequently, enhancing the investment climate through legal
reforms would form a major part of this year's program.
Although successful in stabilizing the country's macroeconomic
indicators, progress in reforming its judiciary -- one of the
main prerequisites for returning confidence to investors -- has
been slow.
As a result, investment, both from foreign and domestic
sources has remained scarce.
Consequently, this has hampered efforts to accelerate economic
growth. If this continues, the economy would only grow at a
mediocre level.
The economy is targeted to grow by around 4 percent this year,
which is deemed insufficient to absorb rising unemployment. New
jobseekers alone are estimated to reach 2.5 million annually.
The LoI contains a set of economic targets and a reform agenda
that must be completed within a certain period of time by the
government in exchange for the IMF money.
It will be presented to IMF management for approval before
being finalized and signed. The letter will then be submitted to
the IMF's executive board for approval.
The last disbursement, amounting to $365 million, was made in
December to bring the total loans the country has taken out so
far to around $3 billion, from a total loan package of $4.8
billion agreed between the government and the IMF in 1999.
This means that $1.8 billion is left from the program, slated
to expire this year.
The government is under pressure not to extend the IMF program
on the grounds that the IMF's medicine has failed to cure the
country's ailing economy.