IMF review team expected to visit Jakarta next month

IMF review team expected to visit Jakarta next month

JAKARTA (JP): Minister of Finance Prijadi Praptosuhardjo
expressed hope on Tuesday that the International Monetary Fund
(IMF) would send a review team here some time in April to
negotiate a new agreement with the government that could release
the third US$400 million loan tranche of a $5 billion bailout
package allocated to Indonesia.

Prijadi said that a group of IMF technical experts had
completed a "fact finding" mission in Jakarta last week and would
report to senior IMF officials in Washington.

"I think they (the technical experts) are satisfied (with the
discussions held with the government) ... and I hope the IMF
review team can return in April," he told reporters on the
sidelines of a meeting with the House of Representatives
commission IV on infrastructure.

"I hope that we will soon reach a new agreement with the IMF,"
he added.

Prijadi believed that the differences between the government
and the IMF had been narrowing.

The IMF postponed disbursement of the third loan tranche last
December over differences with the Indonesian government
regarding some reform measures being implemented, as well as
delays in the execution of several reforms.

In January 2000 the IMF pledged the current administration a
$5 billion loan to help finance a three-year economic reform
program. The Fund has so far disbursed around $1 billion.

The IMF disbursement delay, lingering political uncertainty
and security problems in several provinces have all contributed
to the rupiah's drop in value to a 30-month low of Rp 11,500 per
U.S. dollar earlier this month.

The delay had also prompted other international lenders,
including the World Bank and the Asian Development Bank, to also
cut their lending commitments to the country.

The IMF has expressed disappointment over the slow progress in
the sale of assets controlled by the Indonesian Bank
Restructuring Agency (IBRA), particularly the divestment of
government ownership in the publicly-listed Bank Central Asia
(BCA) and Bank Niaga. The divestment program was supposed to be
completed in December last year, however the House of
Representatives had only recently given approval for the sales.

The Fund has also expressed concern over the government-
proposed amendment of the central bank law, which they feel will
jeopardize the independence of Bank Indonesia. In response to
this concern, the government recently agreed to the IMF's demand
for the formation of a panel of international and local experts
to review and provide input to the amendment of the central bank
law.

The IMF has also been concerned with the poorly designed
fiscal decentralization policy, fearing it could prompt regional
governments to embark on a lending spree.

"Our differences over these three issues are narrowing,"
Prijadi said.

Elsewhere, Prijadi said that IBRA sold around $50 million of
its foreign exchange holdings last week to help defend the
embattled rupiah.

IBRA now holds around $500 million, mostly raised through the
sale of its various assets to foreign investors.

Prijadi earlier this month asked IBRA and some state-owned
enterprises to sell their dollars to help stabilize the ailing
local currency.

The rupiah ended slightly lower on Tuesday at Rp 10,400 per
dollar, down from Rp 10,385 on Friday, amid jitters over the
domestic political condition. President Abdurrahman Wahid is
scheduled on Wednesday to give his response to the House of
Representatives memorandum of censure over his alleged role in
two financial scandals.

Many analysts believe that the House will not be satisfied
with Abdurrahman's response, a situation which could trigger an
impeachment process. (rei)