IMF considers more money for RI

IMF considers more money for RI

JAKARTA (JP): The International Monetary Fund (IMF) will
propose to its executive board additional bailout money for
Indonesia to boost its central bank's reserves ahead of the June
general election, IMF Asia Pacific director Hubert Neiss said on
Monday.

He said the proposal would be discussed by the executive board
at its mid-March meeting when it reviewed Indonesia's revised
letter of intent outlining its economic programs and targets.

"I don't want to mention the precise amount but it will be a
substantial amount because during this period Indonesia needs
outside official support," Neiss told reporters after a meeting
with President B.J. Habibie.

Indonesia, he added, cannot expect a large inflow of private
capital during the preelection period.

Neiss arrived in Jakarta last week to review Indonesia's
economic reform programs.

The IMF is organizing some US$46 billion in bailout money for
Indonesia, to which the fund has committed $11.3 billion. Some $9
billion has been disbursed so far.

Neiss said that the IMF executive board meeting in March would
also decide whether or not to disburse the remaining bailout
money on a bimonthly schedule or maintain the quarterly handout
as was agreed on in December.

He said a change in the disbursement schedule was needed
because the preelection period was a critical time for the
country.

The IMF Jakarta office said on Monday in a press statement
that an agreement had been reached on a new letter of intent
which would be presented to the fund's management for approval in
the middle of March.

According to Neiss, the new memorandum will include details of
what the government calls people's economy programs, aimed at
empowering cooperatives and small and medium-sized businesses.

"Performance under the economic programs has remained on
track," the fund's statement added.

Neiss said that the Indonesian authorities agreed to work
harder to bring inflation to about 10 percent for the 1999/2000
fiscal year ending in March.

"The target for inflation is to get it down very close to 10
percent," he said.

The state's budget proposal for the fiscal year assumes 17
percent inflation.

"The idea will be to get it below two digits. Whether that is
possible we will have to see," Neiss said.

He explained that the target should be achievable if the
government's economic reform programs remained on track, the
international environment remained favorable and the harvest was
normal.

"Again, a measure of social and political stability is an
important ingredient," he added. (rei/prb)