IMF mission to come after review on central bank law

JAKARTA (JP): The International Monetary Fund (IMF) said on Tuesday it would send its mission to Jakarta to review the disbursement of its stalled loan to Indonesia after a panel of experts completed reviewing the government's controversial proposal to amend the central bank law.

IMF Jakarta representative John Dodsworth said that the panel was expected to finish its week-long review on Sunday.

"It (the IMF visit) will be after the panel (completes its work) ... But no date has been set yet," Dodsworth told reporters, following a meeting with the panel and Coordinating Minister for the Economy Rizal Ramli.

Dodsworth earlier hoped that the long-awaited IMF mission could make the visit sometime this month after the Fund made progress in resolving differences with the government over the economic reform program.

The central bank law issue is the only remaining stumbling block between the Fund and the government.

The IMF halted the disbursement of its latest US$400 million loan tranche to Indonesia in December partly due to disagreement with the government over amendments to the proposed central bank law.

The delay in the IMF loan has badly affected investor confidence in the economy with the rupiah falling to a 30-month low last month and prompted Indonesia's traditional donors to issue strong warnings to the government about reducing their badly-needed financial support to the country.

The Paris Club of creditor nations has also threatened to cancel the rescheduling of the country's $5.8 billion sovereign debt, due between March 2000 and March 2002, if the IMF program was not in place.

The visit of the IMF mission would help revive confidence in the economy as it would bring the country much closer to retrieving the Fund's crucial support.

The government proposed to the legislature, in November last year, a bill to amend the current central bank law in a bid to help boost the accountability of Bank Indonesia, which has been plagued by massive corruption in the past.

But the IMF has expressed concern that the amendment would jeopardize the independence of Bank Indonesia.

The panel of experts is a result of government compromise with the IMF in February. The member of the panel includes the Governor of New Zealand Reserves Bank, Don Brash, former Chilean central bank governor Robert Zahler, former Bank Indonesia director Boediono, and local banking law expert Sutan Remi Syahdeni.

The panel began its work on Tuesday. After meeting with Rizal, the panel met with several members of the House of Representatives special team on the amendment of the central bank law.

Panel members declined to comment to reporters about the meeting. (rei)