IMF programs 'need reviewing'

IMF programs 'need reviewing'

JAKARTA (JP): President Abdurrahman Wahid wants to revise the
country's economic programs with the International Monetary Fund
(IMF) to emphasize the development of agriculture and small
businesses, said visiting IMF Asia Pacific director Hubert Neiss.

He said the President wanted to carry out economic policies
tailored to specific conditions in Indonesia.

"The President wants that we start a new program, not carry
over the existing program which would have ended last October
(according to the last letter of intent)," Neiss told reporters
after a meeting with Abdurrahman.

"...the President said he wants to give more emphasis to
agriculture... he also wants to give more emphasis to small and
medium-sized enterprises," he added.

"I think we can accommodate it... I informed the President
that I have to report to the IMF executive board about this
discussion. And if the board agrees and approves then we will
start negotiating very quickly," Neiss said.

He said that putting emphasis on agriculture and small
businesses was not something new because the Asian Development
Bank and the World Bank had specific programs and proposals on
those matters.

The IMF is organizing a US$43 billion bailout to address the
country's economic crisis. The fund has so far disbursed some
$9.5 billion out of its own commitment of $12.3 billion for the
bailout.

The IMF suspended loan disbursements to Indonesia in the
middle of September, pending the resolution of the Bank Bali
scandal and publication of the PricewaterhouseCoopers (PwC) full
audit on the scandal.

Abdurrahman decided on Tuesday to publish the PwC report, and
Neiss received a copy of the report the same day, paving the way
for the resumption of international loans, including from the IMF
to Indonesia.

The government and IMF are expected to complete in the middle
of next month a new letter of intent on a new set of economic
programs and targets to be completed within a certain time frame,
which will be the basis for the IMF board of executives to decide
on the loan disbursement.

The Bank Bali scandal centers on the "legally dubious"
transfer of Rp 546 billion ($80 million at current rate) in
commissions from the bank to a private firm, PT Era Giat Prima
(EGP), which is linked to the inner circle of former president
B.J. Habibie.

The fee was given for the service of EGP in helping the bank
obtain some $120 million in interbank loans on closed down banks,
which were guaranteed by the Indonesian Bank Restructuring Agency
(IBRA).

Neiss urged the government on Wednesday to strengthen IBRA to
allow the agency to be politically independent and to prevent a
similar scandal from reoccurring.

"The (PwC) report is published and follow-up action will be
taken, in particular to strengthen IBRA so such things do not
reoccur," Neiss said.

In a related development, Coordinating Minister for Economy,
Finance and Industry Kwik Kian Gie said on Wednesday that the
government had no intention of replacing IBRA chairman Glenn S.
Yusuf.

"I want to stress that there are no plans at all to replace
the head of IBRA and there will be no interference or disruption
to IBRA," Kwik told reporters following a Cabinet meeting.

Neiss said the bank supervision department of Bank Indonesia
must also be overhauled.

Neiss urged the government to push ahead with follow-up
measures on the findings of the PwC audit to help restore
confidence in the banking sector.

The PwC report mentioned several names, including Golkar Party
officials, senior government officials, businessmen and
individuals, to having received money from EGP, although it has
yet to be proven whether the transfer of funds were related to
the Bank Bali scandal.

"IBRA has become demoralized as a result of constant mass
media reports that its head will be replaced and of allegations
of outside intervention," Neiss said.

Reports said newly appointed finance minister Bambang Sudibyo,
Glenn's superior, was planning to replace Glenn.

There have been rumors that Bambang was under pressure from
People's Consultative Assembly Speaker Amien Rais to replace
Glenn. Bambang owes his ministerial post to Amien, who is also
the chairman of the National Mandate Party in which the minister
was active in the past.

Both Bambang and Amien denied the rumors as baseless.

Meanwhile, Neiss also met with Minister of Trade and Industry
Jusuf Kalla on Wednesday. Neiss is here until Friday.

Speaking to reporters after the meeting, Jusuf said the
meeting was just a general discussion on the state of the
Indonesian economy.

Kalla confirmed, however, that he discussed the Indonesian
proposal to reimpose import duty on rice which was dropped by the
government at the recommendation of the fund.

"There has to be an adjustment in the policy," because the
domestic rice price is now higher than the international price,
Kalla said, but declined to elaborate. (rei/prb)