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)