IMF holding out for RI progress on reform

IMF holding out for RI progress on reform

SEOUL (Dow Jones): The International Monetary Fund (IMF) said
here on Friday that the need for further evidence of reform
progress will far outweigh scheduling concerns in determining
when Indonesia will receive its next loan installment.

"That's the basic issue, it's not just a calendar issue," IMF
Asia Pacific Director Yusuke Horiguchi said.

The IMF, he added, needs to see more progress in Indonesia's
economic reform efforts before it releases the country's next
scheduled loan tranche.

In Jakarta, House of Representatives Speaker Akbar Tandjung
made another attack on the President's economic team, pointing
out that the Cabinet utterly lacked an economic vision.

"Though the government has gained political support
domestically and internationally, its economic team is very weak,
as can be seen from the persistently sick economy," Akbar noted
at the closing of the House's first quarter-session period on
Friday.

He blamed the Cabinet for failing to implement reform programs
which prompted the International Monetary Fund to delay the
second disbursement of its loan to Indonesia for more than six
weeks.

"The IMF is very important for us because it strongly
influences other creditors such as the World Bank and other
multilateral financial agencies," he added.

Akbar lambasted at the government for its extreme lack of
sense of crisis and urgency, as can be noted from its decision to
the grant high officials very generous perks.

In an interview with Dow Jones Newswires in Seoul, Horiguchi
said that the fund's executive board is unlikely to meet to
discuss the next loan disbursement to Indonesia before mid-April.

He noted that the fund's policy-making International Monetary
and Financial Committee, formerly known as the Interim Committee,
is scheduled to meet in mid-April, which will make it
logistically difficult for the executive board to address
individual country matters before then.

Horiguchi is in Seoul to attend the APEC Forum on Shared
Prosperity and Harmony.

As part of the IMF's US$5 billion loan agreement for
Indonesia, the fund's executive board had been expected to hold
its next bimonthly Indonesian review on April 4 to release the
next scheduled $400 million loan tranche.

Horiguchi downplayed the importance of the expected delay.

"Some people are viewing April 4 as seeming like something of
an important date," he said, adding that such target dates should
be viewed as broad milestones instead.

"Having said that, the program implementation has been perhaps
somewhat sluggish relative to what we wanted to see done,"
Horiguchi said.

The IMF wants to see further progress in Indonesian corporate
debt restructuring, Horiguchi said, noting that "progress has not
been all great."

The IMF official added that "given the complicated nature of
the problem, it's not going to be fast."

He said the fund is also concerned about the weakness of the
country's judicial system.

"Unless the court system works, it's very difficult to make
recalcitrant big debtors to behave according to the law," he
said.

Thanks to surging oil exports, Indonesia has recently
experienced an increase in its foreign-exchange reserves. But
Horiguchi said he wasn't worried that the country's improving
external position could potentially undermine the government's
commitment to its reform program.

"Even if Indonesia is financially comfortable in terms of
reserves or oil revenue, I think the markets will treat the lack
of implementation rather severely," he said. "There's always that
leverage."

Horiguchi said he was pleased by Indonesian Senior Economics
Minister Kwik Kian Gie's pledge Wednesday to accelerate
implementation of certain key economic reforms.

"I'm encouraged by Mr. Kwik's statement that they are willing
to make a major advance," he said. "That's what it takes -
authorities' willingness to cooperate." (jun)