IMF may disburse $400m loan to RI soon
IMF may disburse $400m loan to RI soon
WASHINGTON (Bloomberg): Indonesia has made "a lot of progress" toward meeting International Monetary Fund conditions, making it likely the country will get a US$400 million loan disbursement in May, a fund official said.
The IMF plans to send a staff mission to Jakarta later this month to determine whether it can recommend to its executive board release of the disbursement, said Anoop Singh, the IMF's Asia and Pacific department's deputy director.
"The message at this point is fairly upbeat," Singh said.
IMF expects to make about $2 billion in loan payments to Indonesia this year, Singh told reporters in Washington. That's only slightly less money than what was expected to be disbursed before the IMF held up this $400 million disbursement April 4 because of fund concerns about the pace of Indonesian economic reforms, he said.
Singh's comments indicate that recent policy developments in Indonesia are swaying IMF officials in favor of maintaining support.
"We have been greatly reassured by the steps they have taken in the last three weeks," Singh said.
Most recently, Laksamana Sukardi, the newly appointed head of the Jakarta Initiative Task Force, said yesterday that the government is willing to waive withholding taxes for two or three years on revamped loans to the more than 300 companies registered with the restructuring body.
The Indonesian investment minister announced new incentives to speed up the restructuring of more than $70 billion in bad debt to lure foreign investors back to the nation.
Just one week ago, however, Indonesian Finance Minister Bambang Sudibyo accused the International Monetary Fund and the World Bank of excessive interference in the economy.
Indonesia is recovering from its worst recession in decades with the help of a more than $50 billion bailout led by the IMF, yet Bambang said the Washington-based lending agencies are trying to micromanage the country's revival. The IMF approved in February a $5 billion, three-year loan for Indonesia to bolster the economy's revival.
"The World Bank and the IMF are too interventionist," Bambang said to reporters.
The IMF and World Bank have gone so far as to oversee the government's negotiation of performance contracts with executives at state-run PT Bank Negara Indonesia, scheduled to receive $3.9 billion in support from the government, Sudibyo said. The contracts -- which lay out operational targets -- are a condition to receiving state support.
Yet Singh said the postponed disbursement shouldn't draw attention.
"A month's delay in the disbursement is not material," he said. "This is not an emergency."
Indonesia's economy, which contracted by 13 percent in 1998, and 0.2 percent in 1999, may grow up to 4 percent this year, Singh said.
Yet it won't recover from its recent recession until 2003, said Reza Moghadam, the IMF's division chief for Indonesia.
Singh also defended the IMF criticism of it policies, made by many of those who are planning mass protests and acts of civil disobedience during the IMF and World Bank's meetings on Sunday and Monday. Many of the fund's critics, including former World Bank chief economist Joseph Stiglitz, say that following IMF- backed policies helped cause and deepened the recession in Indonesia.
"In our view (the recession) ended sooner because of the program" with the IMF, Singh said. "The country officials that have brought this about are fully aware of this."
Singh was speaking one day after a group of 17 sovereign lenders, including the Group of Seven industrialized nations, accepted the delayed repayment of $5.8 billion of Indonesia's debt owed between this year and the end of first-quarter 2002.
Known as the Paris Club, the group of creditors said this debt will be repaid in the medium and long term, without giving further details. The debt rescheduling concerns repayment of the principal, $2.2 billion of which was due this year, $2.9 billion in 2001, and $700 million in the first quarter of 2002.