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.