IMF may again delay aid to Indonesia

IMF may again delay aid to Indonesia

JAKARTA (JP): The International Monetary Fund (IMF)
representative here, John Dodsworth, confirmed on Tuesday that
the IMF Executive Board in Washington won't meet on April 4, as
originally scheduled, to approve the next disbursement of US$400
million in loans to Indonesia.

Commenting on President Abdurrahman Wahid's earlier remarks
about an April 15 meeting scheduled by the IMF board, Dodsworth
said there was no such agreement yet and he didn't know when the
board would meet on the issue.

Abdurrahman said earlier on Tuesday that to his knowledge the
IMF executive board would meet in mid-April to release the second
tranche of the IMF's $5 billion bailout fund for Indonesia.

"As far as I know, the IMF Executive Board will meet on April
15," the President said in reply to a question as to whether the
IMF had decided to delay indefinitely the next disbursement of
its aid.

But the schedule cited by Abdurrahman Wahid is a delay of
almost two weeks from the April 4 date mentioned by Dodsworth a
week ago.

The first disbursement of $400 million was made in late
January immediately after the Abdurrahman government and the IMF
agreed on a completely new set of reform programs that replaced
the previous ones prepared under former president Soeharto and
continued by his successor former president B.J. Habibie.

The IMF held up its aid last September after the uncovering of
the politically-charged Bank Bali scandal.

"There is no scheduled board date at this point in time,"
Dodsworth told Dow Jones Newswires.

"Certainly the loan is delayed," Dodsworth said, noting that
an IMF team hasn't been able to wind up its review of Indonesia's
economic program on time, due to delays in implementing the
program by the government.

"The review has not been completed in terms of staff
discussions yet, it's now not possible for it to be on April 4."

"Maybe there's some confusion there," he added.

"I don't know when the meeting is going to be, it depends on
when we reach an agreement with the government," he said.

Dodsworth has issued strong warnings over the last couple of
weeks, saying that the IMF might again delay releasing loans
unless the government takes steps to implement economic reforms
and the bank restructuring program.

Dodsworth has increasingly shown his frustration with the
government's efforts to implement the reform measures.

He identified in a speech last week four main obstacles to a
sustained recovery in Indonesia: the lack of a functioning
banking system; the mountain of large unrestructured private
corporate debt; a lack of confidence in public institutions,
including the courts; and a lack of available capital, both
domestic and foreign.

A complete lack of progress on key issues such as bank and
corporate restructuring is stifling the economy and blocking new
investment, the IMF says.

"How long funds will be delayed depends on implementation and
progress in corporate restructuring," Dodsworth said.

He cautioned last week that Indonesia's meeting with members
of the Paris Club government creditors (scheduled for April 12)
for a rescheduling of $2.1 billion in sovereign debts, might be
affected by a delay in IMF aid disbursement.

There has been some cause for optimism recently, he noted,
referring to the Indonesian Bank Restructuring Agency's sale last
week of a 40 percent stake in auto maker PT Astra International.

"The Astra sale is definitely a bright note," Dodsworth said,
referring to the sales of Astra shares to an investor consortium
led by Singapore's Cycle & Carriage Ltd. on Friday. (prb)