IMF and govt to finalize new letter of intent

IMF and govt to finalize new letter of intent

JAKARTA (JP): The International Monetary Fund (IMF) is
finalizing an agreement with the Indonesian government on a new
letter of intent to pave the way for the latest disbursement of
the agency's bailout fund, IMF Asia Pacific director Hubert Neiss
said here on Friday.

"We have practically finalized the new letter of intent,"
Neiss told reporters after meeting with Coordinating Minister for
Economy, Finance and Industry Ginandjar Kartasasmita on Friday.

"The program is on track," he added.

Neiss arrived in Jakarta earlier this week to review the
country's economic reform programs, designed with the help of the
IMF to lift the country out of the 19-month-old economic crisis.

The programs are being financed by the IMF, which has so far
disbursed some US$9 billion out of a total commitment of $11.3
billion.

The next disbursement of the funds will depend on whether the
new letter of intent is approved by the IMF's board of directors,
which is scheduled to convene later this month.

Ginandjar said that the new letter of intent, which would also
include the concept of the people's economy and a new bill on
establishing a good and clean government free of corruption,
nepotism and collusion, would be broader than previous letters.

The transitional government of President B.J. Habibie has
launched the people's economy program to boost the economic
conditions of small-scale businesses, which were disregarded
during the rule of former president Soeharto.

The policy has raised concerns, particularly among a handful
of conglomerates which control much of the country's assets. They
fear the program will be implemented through the forced
redistribution of their assets.

The people's economy policy also threatens to impede the
country's bank restructuring program. Minister of Cooperatives
and Small Enterprises Adi Sasono, one of the strongest supporters
of the people's economy program, reportedly asked the government
to hand over the assets controlled by troubled private banks to
cooperatives.

If this hand over occurs the bank restructuring program will
be placed in jeopardy because the assets are to be sold to the
highest bidder, with the proceeds being used to finance the
program, according to analysts.

Adi, however, denied that he had made such a request.

Chairman of the National Development Planning Board Boediono
admitted on Friday that discussions with Neiss partly focused on
the people's economy program.

He said that Neiss was responding to international concerns
about the new policy.

"But the IMF seems to understand this program," he told
reporters on the sidelines of a meeting with the House of
Representatives Commission VIII for state budget and finance.
(rei)