IMF set to restart loan payments to RI

IMF set to restart loan payments to RI

WASHINGTON (Reuters): The International Monetary Fund is set to approve a US$1 billion loan payment to Indonesia next Monday, and to disburse a further $2 billion in June and July, a senior IMF official said yesterday.

IMF First Deputy Managing Director Stanley Fischer commended the government for making progress on economic reforms, and said he expected the IMF board on Monday to restart loan payments to Indonesia from a $40 billion international rescue package.

"I expect that on Monday, when the board of the IMF meets to consider the next disbursement to Indonesia, that it will -- on the current trajectory, assuming no difficulties arise in the interim -- consider favorably the Indonesian request," Fischer told a business conference in Washington.

Under the terms of Indonesia's initial arrangement with the IMF, the fund would have paid $3 billion in March. But that payment was delayed because the IMF was worried about how Indonesia was implementing the reforms.

Under the new monthly monitoring process, Fischer said next week's payout to Jakarta would be for only $1 billion.

"Instead of disbursing $3 billion on Monday, we will disburse $1 billion on Monday, $1 billion a month later and $1 billion a month after that, with monthly checkups on the execution of the program," Fischer said.

Indonesia, the world's fourth most populous country, turned to the IMF for help after the rupiah currency crashed last October. Its initial currency-related problems quickly exposed a fragile banking system and a mountain of bad debt.

Fischer said the IMF's latest agreement with Jakarta was sound, and he downplayed doubts about Indonesia's commitment to reform. Two previous loan agreements failed because the government dithered on reforms.

Hoping to convince skeptics that this agreement was different, the government has set target dates for implementing the 117- point reform program.

"This is a very good agreement," Fischer said. Fischer said the IMF planned to check each month to see if the authorities were meeting the terms of the latest package, and sources said the IMF would only pay if it was sure the government was doing enough.

The IMF usually monitors the reform programs of its debtors on a quarterly or a semiannual basis, but monthly monitoring has been used in several countries where IMF experts think there is a higher than average risk that policy will slip.