IMF approves disbursement of $395m loan tranche to Indonesia
IMF approves disbursement of $395m loan tranche to Indonesia
JAKARTA (JP): The International Monetary Fund (IMF) approved
early on Tuesday Indonesia's new Letter of Intent (LoI), clearing
the way for disbursement of a US$395 million loan tranche to the
country.
The IMF's approval of the LoI is expected to enable the cash-
strapped country to obtain a vital debt rescheduling facility
from the Paris Club of creditor nations.
IMF First Deputy Managing Director Anne Krueger said Indonesia
deserved strong support from the international community because
it had responded decisively to macroeconomic challenges and
market uncertainty.
"The conclusion of the third review ... is based on the
adoption of early confidence-building measures and the commitment
of the new economic team to maintain macroeconomic stability and
reinvigorate reforms," Krueger said in a media statement.
The LoI, which outlines a set of economic targets and reform
programs, was drafted by the government and an IMF special
mission late last month.
The LoI was approved despite uncertainty over the governments
plan to sell Bank Central Asia (BCA), with the House of
Representatives continuing to deliberate its approval of the
move.
Legislators are scheduled to convene on Wednesday to decide on
the BCA sale.
"The planned sale by IBRA (the Indonesian Bank Restructuring
Agency) of strategic stakes in the publicly listed Bank Central
Asia (BCA) and Bank Niaga will serve as an important litmus test
of the government's commitment to reprivatizing the banking
system," Krueger said.
The government plans to sell a 51 percent stake in BCA to
strategic investors as part of an agreement with the IMF. Last
year, legislators blocked the BCA sale plan, causing the IMF to
suspend its loan program to Indonesia.
Golkar legislator Paskah Suzetta said that the House had not
made any deal with the IMF on the BCA sale plan. IMF Asia Pacific
director Yusuke Horiguchi met with House leaders Monday,
stressing the importance of the BCA sale to the economy.
Meanwhile, Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Jakti said the IMF funds could be disbursed within
weeks, depending on how fast Bank Indonesia prepared documents
for the transfer.
The IMF loan should also help boost the confidence of
investors and international donors in the country.
Speaking in a hearing with the House, Dorodjatun said he would
seek some $1 billion through an international development
assistance (IDA) loan from the World Bank to help finance the
2002 state budget.
The relatively cheap IDA loan carries an annual interest rate
of 0.3 percent.
The government is scheduled to hold a meeting with the
Consultative Group on Indonesia (CGI) in November. CGI groups the
country's traditional donors, coordinated by the World Bank.
A special government team commenced talks with the Paris Club
late on Monday, Jakarta time. The Paris Club is expected to give
its formal approval to the rescheduling of $2.8 billion in
sovereign loans maturing between this year and next, which would
help ease the burden on the state budget.
The government has also planned to ask for another
rescheduling facility for some $6 billion worth of debt maturing
between 2002 and 2004.
The IMF $395 million loan installment is part of a $5 billion
loan package promised by the IMF early last year.(03)