IMF may disburse last loan for RI next month
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.