IMF may release aid next month

IMF may release aid next month

JAKARTA (JP): The International Monetary Fund (IMF) is
expected to disburse its second US$1 billion tranche to Indonesia
in the second or third week of June, a former economics minister
said yesterday.

"If there aren't any significant changes, they (IMF) will
disburse the funds," said Arifin Siregar, former minister of
trade and central bank governor, following a meeting with IMF
Asia-Pacific director Hubert Neiss, in which several other
members of Soeharto's economic architectural team of the 1970s
also attended.

Arifin explained that the IMF's board of directors would make
the decision two weeks after they received a report review, which
is to be prepared by Neiss based on his four-day fact-finding
mission in the wake of the country's political turmoil, which led
to the resignation of Soeharto and the rise of his protege B.J.
Habibie.

Neiss, who met with the country's frail new government,
opposition leaders and senior economists, is to leave Jakarta
tomorrow after holding a press conference.

Indonesia was initially scheduled to receive $1 billion in
funding on June 4, but payment was postponed due to the political
turmoil.

The IMF earlier extended $3 billion from its total commitment
of $10 billion to support the country's sweeping economic reform
which was designed to help lift the country from its worst
economic crisis in decades.

"There are several signs that the bailout money will be
disbursed," Arifin said, but added that it was only his personal
view.

He said the IMF funding would be crucial to the disbursement
of the funds committed by other bilateral and multilateral
institutions as well as donor countries.

Former oil and mining minister Subroto quoted Neiss as saying
during the meeting that there were several positive aspects on
the economic and political fronts, mentioning the new economic
ministerial team which is considered competent, Habibie's move to
set free political prisoners, and plans to create a free press
and open political environment.

"The plans must be implemented, because it is the key to
disbursement," he said.

But Muchtar Pakpahan, a political dissident recently pardoned
and released from jail, asked the IMF to postpone the funding
until a definite political reform agenda had been set out by the
government.

"I'm afraid that the funds will only go to corrupt men within
the government," he told reporters yesterday after meeting with
Neiss.

He added, however, that funding for humanitarian purposes
should be continued, as the economic hardships of the majority of
the population had worsened due to skyrocketing prices of basic
commodities and rising unemployment following the political
turmoil and prolonged monetary crisis.

Subsidies

Separately, Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita said the IMF had given Indonesia
the green light to continue its subsidies on essential food items
amid the worsening economic situation.

"We'll continue the subsidies if necessary. They (IMF) have
agreed with us," he told journalists after a meeting with Neiss
in the afternoon. Several economics ministers were also present
at the meeting.

Under the April agreement with the IMF, subsidies for most
essential food items including sugar, flour, soybean and cooking
oil were to be abolished by Oct. 1.

"We'll continue the subsidies until the economic situation
improves," Ginandjar said.

He, however, stressed that subsidies for goods used for
industrial purposes would soon be eliminated, and urged the
industries to import their own needs.

"The government will only import food commodities of quality
for household consumption," he said.

Both Arifin and Subroto stressed the importance of the
subsidies.

Arifin said the elimination of certain subsidies amid the
worsening economic situation would only worsen the economic
hardships of low-income people.

He explained that the continuation of subsidies would mean a
revision in the financially strained state budget.

Meanwhile, a group of people under the Committee for National
Defense in Surabaya, the country's second largest city, protested
against the United States for its role in trying to delay the IMF
funding.

They visited the American Consulate General's office with
posters saying "IMF Now or Never", "Do Not Interfere with
Indonesian Politics". (rei/imn/26)