IMF assures CGI of Indonesian progress
JAKARTA (JP): The International Monetary Fund (IMF) assured on Friday Indonesia's major donors grouped under the Consultative Group on Indonesia (CGI) of the country's progress in meeting economic reform targets.
State Minister for National Development Planning (Bappenas), Kwik Kian Gie said the IMF had told the CGI during a meeting that "everything was fine and clear."
"The IMF's confirmation is important in such meetings; this time coming directly from Anoop Singh himself," Kwik said, referring to the IMF's Asia Pacific deputy director who is currently leading the IMF team in Jakarta to draw up a new lending agreement with the government.
Friday's meeting between the IMF and local representatives of CGI donor countries was hosted by the World Bank.
Next to Kwik, representing the government were Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti and Bank Indonesia Governor Sjahril Sabirin.
"Pak Dorodjatun gave an overview of Indonesia's economic condition and the positive response we have received up until now from here and abroad," Kwik said.
The CGI groups together Indonesia's major international lenders, which last year pledged around US$4.8 billion in loans to help plug this year's state budget deficit.
Its biggest donors are the World Bank, the Asian Development Bank (ADB), and Japan.
The World Bank and ADB have said their full support to Indonesia depended on the country meeting reform commitments it made with the IMF.
The banks have said that one of the preconditions for a "high- case scenario" was an agreement with the IMF over the economic reform program.
Meanwhile, Japan has slashed its Overseas Development Assistance (ODA) budget, citing a sluggish economy.
Kwik said the IMF's positive comments on Indonesia would help pave the way for a successful meeting of the CGI sometime in November.
He said Indonesia's stance for the upcoming CGI meeting depended on how the 2002 state budget would look like.
Dorodjatun said earlier Indonesia was likely to ask the CGI for more loans to help finance the 2002 state budget.
Concerns remain high that next year's budget would face another gaping deficit, which could exceed this year's projected 3.7 percent Gross Domestic Product (GDP).
Aside from foreign loans, the government plans to plug the budget deficit with proceeds from asset sales by the Indonesian Bank Restructuring Agency (IBRA) and privatization of state-owned enterprises.
CGI's loans are mainly used to support social programs such as poverty alleviation and good corporate governance.
While the group reviews future loans based on Indonesia's ability to work with the IMF, it also demands the country fulfill the pledges it made to receive the loan.
This year's failure to meet forestry commitments has irked donor countries during previous meetings with the government.
The unrealized targets cover the combating of illegal logging, speeding up forest resources assessment and restructuring the country's timber industry.
But foreign support to Indonesia has strengthened since the new government took over with an economic team perceived as market friendly.
Indonesia is also close to signing a new lending agreement with the IMF, or Letter of Intent (LoI), that would unlock a long delayed $400 million loan tranche to the country.
Securing a deal with the Fund is seen as essential to restore Indonesia's tarnished image before the foreign financial community.
The IMF had suspended its $5 billion loan program for Indonesia last December, over the previous administration's failure to meet its LoI reform targets.
Bank Indonesia Governor Sjahril said the government and the IMF had agreed on the monetary targets for the new LoI.
"I can't tell you any figures yet; wait until Monday's announcement," he told waiting reporters.
The IMF had earlier demanded a base money target of Rp 108 trillion, but sources said that Bank Indonesia had been negotiating with the Fund to relax the target slightly.
Singh said his team would be in Indonesia until next Monday. (bkm)