IMF mission to come after review on central bank law

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)