IMF dismisses worries over Paris Club meeting delay

IMF dismisses worries over Paris Club meeting delay

JAKARTA (JP): The International Monetary Fund (IMF) dismissed
on Thursday worries that a delay in the Paris Club meeting had
put at risk a US$2.8 billion debt rescheduling deal for this
year.

The IMF senior resident representative for Jakarta, David C.L.
Nellor, expressed confidence that Indonesia's debt rescheduling
deal with the Paris Club was safe.

"I am sure that major creditor countries, having expressed
very positive comments on Indonesia's reforms program during the
IMF board meeting on Sept. 10, will reflect those (comments) at
the Paris Club," Nellor said on the sidelines of a seminar on tax
reforms.

The Paris Club meeting, slated for mid-September, was delayed
indefinitely after its American delegation was unable to attend
following the devastating terror attacks on the United States.

The meeting of the Paris Club should have formalized the
rescheduling of Indonesia's $2.8 billion sovereign debt maturing
in March 2002.

The delay came after Indonesia painstakingly secured an IMF
lending agreement, without which the Paris Club deal was void.

Uncertainty over the Paris Club meeting and concerns over the
U.S. economy, Indonesia's biggest export market, are weighing
heavy on the fragile rupiah.

Nellor agreed the Paris Club delay did cause uncertainty, but
he said the members of the club were unlikely to change their
stance on Indonesia.

He declined to estimate when the Paris Club would meet, saying
the announcement should come from the club.

He also said he saw no immediate need to alter the IMF's
position on Indonesia despite a looming global economic
recession.

The fund recently approved a $400 million loan package to
Indonesia, after the government agreed to new economic reform
targets under the Letter of Intent (LoI).

Nellor said any plans to revise Indonesia's reform program,
would be discussed by the fund and the government during the
quarterly review of the country's economic outlook.

"We need to reassess what's happening in the global economy
and what's happening in Indonesia and make adjustments
accordingly. Whether that involves changes in the policy, changes
in the targets, we have to wait and see," he explained.

"It's not yet time to come to a strong judgment. At the moment
people are making assessments of what the implications of the
tragedy might be for U.S. economic growth and global growth," he
added.

Nellor further said the 2002 budget assumptions were still
relevant.

"The budget presented to the legislature attempted to be
fairly conservative, so that's a strong backdrop to this
uncertain situation," he said.

Nellor said Indonesia had adopted a sound economic reform
program as contained in its LoI. "I think the investment
community in general has recognized this," he said.

Nellor added that President Megawati Soekarnoputri's visit to
Washington was also an opportunity to highlight Indonesia's
economic reforms progress before foreign investors.

Separately, former finance minister Bambang Sudibyo said the
government should seek a debt rescheduling deal that would last
until 2004.

By then, he said Indonesia would have finalized consolidating
its budget to eliminate the containing deficit.

Earlier, the government said it would seek a third Paris Club
debt rescheduling deal to ease pressure on the 2002 budget from
foreign debt payments.

For the same reason, it also indicated that it would seek more
loans from creditor countries under the Consultative Group on
Indonesia (CGI), which will meet in November to discuss new loans
for Indonesia.

But Bambang said the government should address this concern
more by rescheduling its debts rather than accumulating new ones.
(bkm)