IMF confident latest plan will work

IMF confident latest plan will work

WASHINGTON (Reuters): International Monetary Fund chief Michel Camdessus said on Tuesday he was confident the latest rescue package for Indonesia would work and rejected criticism of the IMF's approach to Jakarta's problems.

Indonesia agreed with the IMF on Friday to a 117-point reform package in return for a bail-out package of $43 billion to end the country's worst economic crisis in three decades.

The agreement, the third in six months, has been generally welcomed, but analysts have said the key would be its implementation, especially since Jakarta was seen as backsliding on the first two IMF pacts.

Critics have said President Soeharto dithered on implementation because some of the reforms would dismantle lucrative monopolies controlled by his family and associates.

"I am confident that this will work," Camdessus told a news conference.

Despite the reluctance of what he called "vested interests" to embark on reforms like those prescribed by the IMF, Camdessus said one of the main reasons for his assurance was that Indonesian authorities had learned the high cost of rejecting the IMF's advice.

"They know pretty well the cost of not accepting and adhering to it earlier," Camdessus said.

"The cost for the country has been tremendous. Each time we had to come back to the program, we had to strengthen it. This time we have an excellent program," he said.

Camdessus, speaking at a news conference ahead of the IMF's spring meeting in Washington, said the program agreed to last week would address Indonesia's fundamental economic problems.

The new program finds "solutions that preserve the long-term objectives, while taking due consideration of the immediate social costs of the measures," he said.

Camdessus dismissed criticism that the IMF had not properly addressed the mix of problems in Indonesia and he defended the IMF's multi-pronged approach.

"We had no choice but to address simultaneously the major macro-deficiencies of this economy and its major deficiencies both in the banking and the structural domain," he said.

"It would have been nonsense to have the illusion that by solving the macro imbalances, you would have Indonesia on a long track of sustainable growth."

In its latest plan, the government promised a new anti- monopoly law, moves to set up a bankruptcy law and a special bankruptcy court and regulations for winding up companies, mergers and acquisitions.

It also promised transparent and competitive bidding for public infrastructure contracts, ministerial statements and newspaper ads to explain official decisions, and procedures to deal with public complaints.

A concrete plan for privatization of state enterprises and faster restructuring of the banking sector were also detailed.