IMF team to review reform program next week
IMF team to review reform program next week
JAKARTA (JP): The International Monetary Fund (IMF) review
team will resume talks with the government next week over the
country's economic reform program, said Coordinating Minister for
the Economy, Finance and Industry Kwik Kian Gie.
He said the discussion with the IMF team would focus on new
economic measures needed by the country to resolve its current
economic crisis.
"It will be a regular meeting ... We'll discuss new programs
for the future," Kwik told reporters on the sidelines of a
seminar.
He said the IMF team, which will be in Jakarta from June 12 to
June 22, would not review the performance of the government in
implementing the ongoing economic programs as the deadline for
the implementation of most of the key economic measures fell at
the end of this month.
The IMF has recently disbursed a US$372 million loan to the
country after the fund approved the government's new letter of
intent, which contains a set of key economic measures mostly to
be completed by the end of June.
This was the second disbursement out of the $5 billion loan
promised by the fund in January to help finance the country's
economic reform program.
The loan was supposed to be disbursed in April, but was
delayed due to the slow progress of the government in
implementing key economic measures.
IMF Jakarta representative John Dodsworth had reportedly
criticized the government earlier this week for its inconsistency
in implementing key reform programs.
But Kwik said the accusation made by Dodsworth was
"confusing".
"I don't understand what he means by inconsistency. He talks
just like other Indonesian analysts. If there are inconsistencies
in the programs, he should specify which ones and in what case,"
he said in response to questions from journalists.
Kwik also attacked former IMF Asia Pacific director Hubert
Neiss' recent comments in the foreign media that Indonesia might
suffer a second round of the economic crisis if the rupiah
tumbles to between Rp 9,000 to Rp 10,000 to the U.S. dollar.
The rupiah has been under pressure over the past month,
particularly due to domestic political uncertainty and social
unrest.
The rupiah closed at Rp 8,605 to the U.S. dollar on Friday,
which is much weaker than the government's target of Rp 7,000 to
the dollar for this year.
Kwik said the volatility and weakening of the rupiah was also
a consequence of when the country adopted a free-floating
exchange rate system in August 1997, allowing the exchange rate
of the rupiah to be decided by market mechanisms.
"Neiss' comments could be true or false ...," he said. But he
added that Neiss should have realized that the fluctuation in the
exchange rate of the rupiah was a consequence of the free-
floating system, which was strongly supported by Neiss when he
was still at the IMF.
"So I can't understand why he should say such things after
he's now at the Deutsche Bank," Kwik said.
Asked to comment on the plans by the central bank to continue
raising the interest rate of its SBI promissory notes if the
rupiah continued to weaken, Kwik said: "It's the policy of Bank
Indonesia. The government will not intervene because Bank
Indonesia is an independent central bank."
He also said Bank Indonesia had to raise the interest rates
because interest rates overseas had also increased.
"If Bank Indonesia didn't increase the interest rate, people
would park their money overseas," he said.
The interest rate of one-month SBI notes increased to 11.13
percent on Wednesday compared to 11.07 percent the previous week.
An increase in the domestic interest rate would create more of
a burden for the government as it had issued a massive amount of
bonds to help finance the recapitalization of the country's
banks. A large part of the bonds carry a variable interest
rate.(rei)