IMF letter fires warning shot at RI

IMF letter fires warning shot at RI

HONG KONG (Dow Jones): Frustrated by the slow pace of economic
reform, the International Monetary Fund has fired a warning shot
across the Indonesian government's bow, the Far Eastern Economic
Review reports in its latest edition to be published Thursday.

In a tersely worded letter dated Nov. 8 and obtained by the
magazine, Anoop Singh, the Fund's Washington-based deputy
director for Asia and the Pacific, demanded that Jakarta move
decisively to minimize risks in its fiscal decentralization plan,
use higher oil revenues to repay government debt and set a firm
timetable for asset sales.

Failure to do so by early December, the letter suggests, could
stop the IMF's board from approving fresh loans to the country.
IMF officials in Washington refused to comment on the matter.

In the three-page letter, Singh details "the main actions
which were due to be implemented by end-October...and which have
yet to be completed."

One of the IMF's top concerns is Indonesia's proposed
devaluation of fiscal authority from the center to local
governments - part of a sweeping new decentralization program
scheduled to take effect on Jan. 1. The IMF wants Jakarta to
prohibit local governments from borrowing independently from
abroad and from borrowing independently at all through 2001.

The IMF has long been critical of what one Fund official calls
"the politicization of IBRA."

Now it wants IBRA to "publish a detailed asset schedule for
the first half of 2001 after securing letters of commitment from
asset owners and appointing financial advisors in all cases,"
according to the letter.

The IMF also wants the government to get parliament's approval
to reschedule the delayed sale of two banks - Bank Central Asia
and Bank Niaga. Finally, it wants IBRA's debt restructuring of
its 21 largest debtors subject to "independent assessment from
IBRA's oversight committee."