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)