IMF director arrives to review aid program

JAKARTA (JP): IMF Asia Pacific director Hubert Neiss said yesterday he expected the agency to disburse its second US$1 billion bailout money to Indonesia next month.

"It could be mid July, or early July. It depends on how quickly we finish here," he told reporters upon arrival here yesterday afternoon.

The IMF has committed to provide $10 billion as part of a $43 billion bailout fund for Indonesia. The agency has so far disbursed $4 billion.

The second $1 billion disbursement was initially scheduled for June 4, but was delayed due to the country's recent political unrest.

Neiss arrived in Jakarta to lead the IMF technical team to review the country's economic reform programs agreed upon with the fund in April.

This is Neiss' second visit to Jakarta in 10 days.

His last visit, during which the IMF Asia director met a veritable who's who of the Indonesian establishment including government members, prominent opposition leaders, even trade unionists, was designed to help the board of the IMF decide when it could resume lending to the beleaguered country.

Chairman of the National Development Planning Board (Bappenas) Budiono earlier said the IMF team would not focus on reviewing the structural reform since most of the programs had been implemented.

He pointed out that tomorrow's discussion would center on reviewing the country's macroeconomic targets, state budget and social safety net program.

He was optimistic the IMF would make the second disbursement because the country had met all the agency's criteria.

Indonesia's macroeconomic picture has dramatically changed since the economic reform program was agreed upon earlier this year. The current situation has deteriorated following the political turmoil.

Analysts said the economy would contract by more than 10 percent this year with inflation surpassing 100 percent and unemployment to reach 20 million.

They also the earlier year-end target of the rupiah exchange rate of Rp 6,000 to the U.S. dollar was no longer realistic.

The rupiah yesterday closed at Rp 12,000 to the dollar, compared to about Rp 8,000 when the reform program was agreed in April. (rei)