IMF sees no obstacle at Paris Club

Dadan Wijaksana, The Jakarta Post, Jakarta

Seemingly satisfied with the country's economic reform programs, the International Monetary Fund (IMF) said there would be no specific obstacles for the government in seeking a debt rescheduling facility at this week's Paris Club meeting.

Nevertheless, IMF representative in Jakarta David C. Nellor said on Monday that creditor nations in the club would be very much interested in the country's progress on reform programs, including issues such as the bank liquidity support loans and Bank Niaga divestment plan.

"There are no specific obstacles, but the creditor nations will be interested in hearing about the developments on reform programs and they will no doubt raise some of those issues," Nellor told reporters.

The optimism should prove beneficial as the backing of the IMF is seen as crucial to securing a rescheduling facility from the Paris Club of creditor nations.

The government is seeking to reschedule some US$5.5 billion in sovereign debt, both principal and interest, maturing from April this year to December, 2003. This is crucial to help maintain the state budget deficit at a safe level.

The government is currently shouldering a staggering $137 billion in total debt, or around 90 percent of gross domestic product, of which $74 billion is owed to foreign lenders.

Meanwhile, Minister of Finance Boediono also expressed his optimism on Monday that the country would be successful in securing a rescheduling deal from the official creditors, as he has seen strong support during his recent tour to several donor countries.

"There are no problems at all; God willing, I think we can make it," Boediono said.

He said that the government had completed all preparations for the Paris Club meeting.

"We have completed the final preparations and our technical team is in Paris," he said.

He declined to elaborate on the final amount of debt to be rescheduled or reports that the government wanted to extend the debt for 20 years.

Boediono will leave for Paris late on Tuesday. Negotiations with creditors are scheduled to take place on Thursday and Friday.

The IMF sponsors the country's economic reform program under a $5 billion loan package.

The government has been making progress in implementing key reforms, particularly with the recent sale of its stake in Bank Central Asia (BCA), the country's largest retail bank.

The government has also obtained House of Representatives approval for its 2002 privatization plan. The House has also approved a key anti money-laundering bill.

The financial market has been in a positive mood on expectations of a successful outcome from the Paris Club meet. The rupiah extended last week's gain on Monday's closing at Rp 9,525 per U.S. dollar, from Rp 9,560 last Friday. The stock market has also been bullish recently.