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.