IMF approves final loan tranche to Indonesia

IMF approves final loan tranche to Indonesia

Agencies
Jakarta

The International Monetary Fund (IMF) on Friday approved a new
US$505 million loan to Indonesia, the final portion of the $5.3
billion support program that the government called in after the
1997-98 Asian financial crisis.

Indonesia has already decided not to ask the international
lender for a new support program. Nonetheless, the country will
enter into the IMF's "post-program-monitoring" scheme, under
which the IMF will continue to check Indonesia's economic
conditions and advise policy if necessary.

Upon approval of the last portion of the loan, the IMF board
applauded Indonesia's efforts of the past few years to put its
economy on a sustained recovery track.

"An impressive fiscal consolidation and disinflation effort,
together with reduced external vulnerability, have laid the basis
for a sustained improvement in growth and employment prospects in
the period ahead," IMF Deputy Managing Director Shigemitsu
Sugisaki said in a statement quoted by Dow Jones news wire.

The IMF also expressed optimism about the nation's efforts to
continue economic reform.

"Satisfactory progress continues to be made with key
structural reforms. The divestment of government ownership in
banks is proceeding well ... . It will be important to sustain
these reform efforts and, in particular to follow up decisively
on the recent steps," Sugisaki said.

Daniel Citrin, the IMF's Indonesia mission chief, was reported
by Agence France-Presse as saying the country's economy has
stabilized since the regional crisis.

"The fact that they are not seeking a new arrangement for 2004
is testimony to the success of the government' efforts to restore
macroeconomic stability," he told reporters.

The Indonesian economy, he said, "has tremendous potential; it
is a rich country with rich resources, and an educated labor
force. What's needed is a much more stable and regulatory policy
environment."

Since the Asian crisis, the IMF's lending to Indonesia has
totaled $13 billion, of which the government has paid back about
$3 billion.

Indonesia's retirement from the program also means the end of
nearly automatic debt rescheduling from the so-called Paris Club
of government creditors. The country has already announced its
post-IMF reform strategy, in a "White Paper," in the hope of
keeping the confidence of these and other private international
lenders. According to the World Bank, Indonesia needs to raise
about $10 billion in 2004 to refinance its debts.

"The (Indonesian) government's economic package for 2004, as
set out in its 'White Paper,' provides a sound framework for
meeting the challenge of keeping investor confidence," Sugisaki
added.