IMF may disburse last loan for RI next month
The Jakarta Post, Jakarta
The International Monetary Fund (IMF) may disburse its final loan tranche to Indonesia next month under the four-year US$5 billion lending program, the Fund's representative David Nellor said on Thursday.
The disbursement, expected to be worth $490 million, will come after the IMF's board of directors approve the country's latest economic reform program, Nellor said.
"If the IMF executive board agrees, Indonesia will be in a position to make that last withdrawal under the bailout program," he said.
A visiting IMF team and the government last week completed the final review of the country's economy. The reform program and a set of economic targets (laid out in a document called letter of intent, or LoI) were designed based on this review.
The upcoming disbursement would mark the end of the IMF Extended Fund Facility, following a recent decision by the government not to extend the program. The government has outlined its own economic reform program with a special White Paper document as a replacement, which contains a set of action targets the government will attempt to meet next year.
The IMF was invited by the government in 1999 to help rescue the economy, which was virtually crippled by the Asian financial crisis. The program requires the government to meet economic targets laid out under the LoI, which would in return reward the country's compliance with another loan tranche.
The decision not to renew the program means that allocations solely from the state budget will have to be used to pay back maturing foreign debts starting next year as it also will no longer be eligible for debt relief from the Paris Club of lending nations.
To help cover the forecasted shortfall, the government is expected to seek alternative domestic financing, coupled with its traditional sources, such as soft loans from the Consultative Group on Indonesia (CGI).
Indonesia will need around $3 billion from the CGI, which will convene early next month to discuss the exact amount of loans to be disbursed to the country.
Nellor also commented that the $200 million Bank Negara Indonesia (BNI) lending scandal might further damage investor confidence, particularly their investment appetite regarding the country's state-owned banks.
He said that state-owned banks, like BNI, were an integral part of the country's banking sector, and their performance would have a sizable impact on other banks as a whole.
Analysts said that BNI's case highlighted yet again how fragile the internal controls were in the country's banks, amid the government's intensified efforts to privatize them.