IMF approves $960m loan for Indonesia

IMF approves $960m loan for Indonesia

WASHINGTON (Reuters): The International Monetary Fund approved
on Friday a $960 million loan payment to Indonesia from a global
rescue package and urged the government to speed the pace of
banking reform and debt restructuring.

The IMF said its executive board approved the payment from a
$42-billion-plus international package arranged by the
Washington-based lending agency in November 1997.

The IMF pledged more than $11 billion in loans to that
package, and has paid out nearly $8 billion including Friday's
installment.

"Due to good policy implementation, the Indonesian economy is
showing welcome signs of stabilization," IMF Managing Director
Michel Camdessus said in a statement.

The rupiah currency has strengthened, inflation has slowed
sharply, and interest rates have begun to decline, Camdessus
said.

The rupiah edged higher on Friday, lifted by more dollar
selling by state banks although dealers noted the currency
remained vulnerable. The currency ended at 8,400/8,500 against
the dollar in Jakarta trading compared with 8,500/8,700 at the
Jakarta close on Thursday.

Camdessus urged the government to make "rapid progress"
reforming the banking sector and to press ahead with corporate
debt restructuring. "Together with consolidation of the progress
in stabilization, these reforms will create the basis for a
sustained recovery of output," Camdessus said.

The IMF assembled the bailout after Indonesia's financial
markets collapsed amid the wider Asian financial crisis. Economic
conditions deteriorated in May when political and economic chaos
broke the 32-year rule of former President Soeharto, prompting
the IMF to freeze loan payments.

Disbursements resumed in July, and donors agreed to increase
bailout lending to support the programs of the new president,
B.J. Habibie.