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)