IMF completes review of RI's economy, reform

IMF completes review of RI's economy, reform

A'an Suryana, The Jakarta Post, Jakarta

The International Monetary Fund (IMF) completed on Saturday
reviewing the country's economic situation and the implementation
of economic reform measures here, according to a senior
government official.

Mahendra Siregar, an expert at the Office of the Coordinating
Minister for Economy, said the IMF review team was heartened by
the relatively stable macroeconomic situation.

"The outcome (of the review) is encouraging. The IMF noticed
the Indonesian economy had stabilized," he told The Jakarta Post
on Saturday, pointing out positive factors such as the stable
exchange rate of the rupiah against the U.S. dollar at around Rp
9,000, slowing inflation, and the decrease in Bank Indonesia's
benchmark interest rate.

The IMF review team, led by the fund's senior advisor for Asia
Pacific, Daniel Citrin, had been in Jakarta for a week. The
completion of such review work is normally followed by the
issuance of a new letter of intent (LoI) by the government, which
basically contains a set of new economic targets and an economic
reform agenda.

The review team will now report to the IMF board of directors
in Washington. If the latter approves the LoI, the fund will
disburse its next US$350 million loan tranche for the country.
The last loan tranche was made in April.

Mahendra said the IMF board was expected to convene in
September to decide on the approval of the seventh LoI.

The IMF is providing Indonesia with a three-year $5 billion
bailout loan program. The country has so far received a total of
$2.6 billion.

No details of the new LoI have been made available yet.

Meanwhile, Anggito Abimanyu, an official at the finance
ministry, was quoted by Antara as saying that among the economic
measures included in the seventh LoI were plans to issue
perpetual promissory notes (PPN) and the time schedule for the
sale of government shares in several banks.

Reports have said the government and Bank Indonesia have
agreed to settle a dispute over who should be responsible in
covering massive liquidity support channeled to ailing banks
during the late 1990s financial crisis.

Under the deal, the government would issue Rp 134.5 trillion
of PPNs to the central bank. The bonds would not jeopardize the
government's finances because PPNs have no interest rate or
maturity. However, the government would have to pay interest if
the central bank's capital condition was under threat.

Anggito added the government would sell shares in Bank Niaga
this September, followed by the sale of a stake in Bank Danamon.

Mahendra said the government had also reported to the IMF
review team on progress in legal reform, including the completion
of a draft bill on the anticorruption commission, and a draft on
the amendment to the bankruptcy law.

He said lawmakers were expected to debate the two bills next
month.