IMF believes RI will stick to reform plan

IMF believes RI will stick to reform plan

SINGAPORE (Agencies): The International Monetary Fund believes Indonesia will continue with its economic reform policies regardless of who wins the presidential contest on Wednesday.

IMF First Managing Director Stanley Fischer said talks in Jakarta with the present government of B.J. Habibie, opposition parties and academics on the country's reform agenda didn't throw up "major differences" on economic policy.

"That was encouraging," Fischer told a news conference at the World Economic Forum's East Asia Summit.

Dowjones reported Fischer reiterated that IMF lending to Indonesia would remain frozen until the publication of a full report into the Bank Bali scandal. "Until that is resolved it will be very difficult to get the program back on track," he said.

Fischer noted that legal issues are preventing the report from being published.

In Jakarta, a local newspaper reported Monday that the Supreme Court is set to release its legal opinion later this week on whether the government can publish the report.

The government's decision to withhold the report has sparked widespread criticism, including from the IMF and World Bank. Both agencies have suspended loans to Indonesia and have demanded a transparent investigation process.

Fischer noted that some legal experts believe there are no legal impediments to the report being published.

The full report is believed to contain names of senior government officials and politicians that helped orchestrate the transfer of funds out of Bank Bali to a company controlled by a senior official in the ruling Golkar party.

Fischer estimated that five Asian economies hardest hit by the regional financial crisis would grow by an average four percent next year.

He said South Korea was leading the economic recovery among the crisis-hit countries which also include Thailand, Malaysia, Indonesia and the Philippines.

"The Asia-five crisis countries are together now expected to grow on average by almost three percent in 1999 and four percent in 2000," Fischer was quoted by AFP as saying.

"At the moment (South) Korea is in the lead among the crisis countries with growth rate for 1999 likely to exceed sort of six, seven percent average of previous years," he said.

He said South Korea's quick recovery was because of rapid moves by the government to help the battered banking sector.

He said electronics exports had also helped the country recover faster than the others from the crisis, which erupted in mid-1997 and forced Seoul to seek an IMF bailout totaling $58 billion.

He also said that Asian countries which managed to escape the brunt of the crisis should not ignore reforms, to enable the whole region to restore the dynamism which underpinned stunning rates of growth before 1997.

Fischer said China had weathered the crisis better than many had expected through a well-timed fiscal stimulus which helped support economic activity and the stability of the yuan.

He said that the recent appreciation of most Asian currencies, including the Japanese yen, had helped to reverse the real effective appreciation of the yuan in the initial stage of the crisis.

But Fischer added that China still had to grapple with structural reform of the state sector and the banking sector.