IMF says talks continuing on Indonesia's loan program

IMF says talks continuing on Indonesia's loan program

WASHINGTON (Dow Jones): The International Monetary Fund is
trying to overcome several sticking points in negotiations with
Indonesia and Russia over the state of their loan programs.

Thomas Dawson, director of external relations at the Fund,
told reporters at a regular briefing that an IMF team "would need
to return to Jakarta for this current review of the program to be
taken forward and ... I can't give you the sense now of when that
will be."

He said the IMF is waiting for the authorities in Jakarta to
finalize a revamp of the central bank that will enhance its
transparency and accountability without threatening its
independence.

Dawson added the IMF also wants to see proper safeguards on
the fiscal decentralization program and clear progress on bad
debt work-outs and asset sales under IBRA.

The IMF hasn't provided Jakarta with a third, $400 million,
installment due under a $5-billion loan arrangement, approved a
year ago.

At the heart of this delay is wrangling over the nature of
reforms proposed for Indonesia's central bank, plans to give
greater financial responsibility to the provinces, and stuttering
progress in cleaning up the banking sector through the Indonesian
Bank Restructuring Agency.

Dawson added at the press briefing on Friday that the Russian
situation continues to be one of pretty strong growth from a
macro position (and) from a balance of payments position, so any
new arrangement would - as indicated before - be a precautionary
arrangement.

"The IMF staff assessment is that, despite the recent decline
in oil prices, the Russian balance of payments is still strong
and the short-term outlook is favorable," he said.

Looking further ahead, the IMF still believes that Russia's
medium-term outlook hinges on its success in implementing
structural reforms, ranging from basic contract law through to a
stronger, more transparent and accountable central bank.

For the moment, however, Dawson acknowledges that "there is no
financing gap" in Russia that demands IMF assistance, and so the
long process of negotiating a precautionary loan arrangement goes
on.