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)