IMF says loans to Russia, Indonesia remain on hold

IMF says loans to Russia, Indonesia remain on hold

WASHINGTON (Dow Jones): The International Monetary Fund
remains resolute in its suspension of loan programs with Russia
and Indonesia as it awaits separate audit reports from
PricewaterhouseCoopers.

Thomas Dawson, director of external relations at the Fund,
told reporters Wednesday the IMF hasn't altered its demand that
the Indonesian government publish the full investigation by
PricewaterhouseCoopers into the Bank Bali scandal.

At the same time, the IMF board awaits a report by the
chartered accountants into recent activities of subsidiaries of
the Russian central bank.

Both Russia and Indonesia have had their loan programs placed
on hold, with Moscow more likely to receive funds first.

The probe into the Indonesian bank scandal is complete but the
government has stalled in publishing it. Dawson said the
PricewaterhouseCoopers report into the activities of Russian
central bank subsidiaries is nearing completion.

Also, Russia is meeting or exceeding most of the economic and
fiscal targets set with the IMF back in July, when the Fund
approved a $4.5 billion loan package to be used exclusively to
retire existing IMF debts owed by Moscow.

However, Russia must still put in place a series of safeguards
against possible misuse of official funds.

"I think our expectation is that study is close to being
completed and probably would be ready in the next few...weeks, if
not days," Dawson told reporters.

"The second issue that's up is having assurances regarding the
safeguarding of (IMF) resources in...Russia and that's an issue
that many on the (IMF) board have raised," he said.

Some Russian officials had voiced hopes that the IMF will be
ready to approve the next installment of $640 million during
October but that appears unlikely.

Dawson said he is unable to say whether Russia will even be
able to secure these funds in November, given the number of
conditions that must be satisfied first.

He ruled out reports that the IMF has set as a new condition
on the next loan installment the requirement that the central
bank close or sell its European bank subsidiaries.

"Certainly there has been a sort of trend worldwide that
central banks (should) engage in commercial banking activities,"
Dawson said of this issue, adding that "it is not a condition for
the next disbursement."

In Indonesia, meanwhile, the PricewaterhouseCoopers report
remains the subject of litigation and is still no closer to
publication.

"We still are expecting that it will be published and are
anxious that go forward," Dawson said.

The IMF approved a $460 million loan installment for Indonesia
Aug. 3 but subsequently put discussions on the next quarterly
disbursement on hold until the authorities in Jakarta addressed
its concerns about the Bank Bali scandal and the anti-
independence violence in East Timor.