IMF approves $358m loan tranche to RI

IMF approves $358m loan tranche to RI

Dow Jones, Washington

The International Monetary Fund (IMF) agreed Friday to
disburse US$358 million of its latest loan tranche to the
country, as part of a $5 billion loan program aimed at prodding
the country into undertaking reforms that would strengthen its
fragile economy.

The IMF said they were impressed by the country's economic
performance, including the rising value of its currency, the
rupiah.

Anne Krueger, an IMF top official, said the decision reflected
the country's strong economic performance.

She said she found the recent rise of the rupiah "encouraging.
The country's monetary policy, moreover, has become "more
supportive of the economic recovery," she said.

The rupiah has been steadily rising against the dollar since
the start of the year. The American greenback has so far lost
about 15 percent of its value since then.

"Market sentiment and the macroeconomic outlook have
improved," Krueger said.

"With continued implementation of the reform agenda, Indonesia
has the opportunity to create the conditions for more rapid
economic growth and a sustained reduction in poverty."

The IMF is administering a three-year $5 billion loan program
aimed at spurring economic reforms in Indonesia. The
disbursement, once completed, would raise Indonesia's total
borrowing under the program to about $2.6 billion.

However, Krueger also said that the country needs to speed up
the privatization of government-owned banks.

"The pace of privatization has lagged ... and accelerated
progress will be needed in the second half of the year," she
said.

Indonesia's economy has grown faster than many of its
neighbors' in the aftermath of the Asian financial crisis of
1997, but most economists still regard it as fragile.

The economy grew just 3.3 percent last year, slowing from a
4.9 percent rate in 2000.

The IMF, which ends its relationship with Indonesia in
December 2003, originally hoped to help the country achieve a
growth rate of 5 percent to 6 percent by 2002, but those goals
have been scaled down to a range of 3 percent to 4 percent.