IMF approves $450 million loan to Indonesia

IMF approves $450 million loan to Indonesia

WASHINGTON (Reuters): The International Monetary Fund said on Monday it had approved a US$450 million loan for Indonesia, following completion of the country's first democratic elections in 44 years.

The fund's board meeting to approve the loan, part of an IMF- led $43 billion rescue package for the country, took place on the same day as the elections, the IMF said.

With the release of the latest tranche, Indonesia's draw-down from the IMF would total about $10 billion

Stanley Fischer, the IMF's deputy managing director, said the board considered that recent developments in Indonesia pointed to "a somewhat improved macroeconomic outlook for 1999."

"In particular, growth was expected to become positive and 12- month inflation could fall toward the single-digit range by the end of this year," he said in a written statement.

Last month the World Bank approved a $1.1 billion loan for Indonesia, the world's fourth most populous country, and said funds could not be drawn until after the election because it did not want the timing of the loan's approval in any way to affect the outcome of the vote.

International lenders have long been worried about the fate of money paid to Indonesia, which has been dogged by years of corruption and crony capitalism.

Officials said the latest World Bank loans will be subject to an unprecedented degree of transparency so human rights groups and others can monitor how the money is spent.

Full documents detailing terms of the loan will be published on the World Bank website and payments depend on clear evidence that Indonesia is meeting its promises on reform.

Indonesian officials have conceded that previous funds have been misused by the country's ruling Golkar party. A World Bank document released last August said up to 20 percent of loans to Indonesia in the pre-crisis years could have been misused.

Indonesia has been recovering more slowly than other victims of Asia's economic flu.