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)