IMF to consider extending RI program
Berni K. Moestafa and Tantri Yuliandini, The Jakarta Post, Jakarta
The International Monetary Fund (IMF) said on Friday it would consider extending its contract with the government, citing that a one year extension of the contract could possibly be appropriate.
The delegation head of a visiting IMF team in Jakarta said he would recommend to the Fund's executive and management boards to continue its financial aid program to Indonesia after the current one agreement expired in December 2002.
"A one year extension is what the government wants, and we believe that it is appropriate," said the IMF's Asia Pacific Department senior advisor Daniel Citrin, who is leading the IMF mission to Jakarta
The government said it needed an IMF contract extension to secure crucial debt rescheduling deals with foreign creditors.
The Paris Club of creditor nations requires that Indonesia comply with the IMF's reform program as part of any debt rescheduling deal.
Between 2002 and 2004, the government hopes to reschedule some US$6 billion in debts in a bid to help ease the pressure on future state budgets. Failure to obtain the rescheduling facility could have serious consequences for the sustainability of state budgets in coming years.
Much of the debt rescheduling would come from the Paris Club, which will meet for the third time in February 2002 in Paris.
By then, the government said, it would have to have obtained an IMF contract extension of at least one year.
But Citrin did not indicate when an IMF decision was be taken, saying there was no specific timetable.
"It's for the management and board to decide," he told reporters after meeting Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti.
Citrin arrived in Jakarta last week to participate in a meeting of Indonesia's creditors assembled in the Consultative Group on Indonesia (CGI).
Last week, the group approved $3.14 billion in new loans for Indonesia to help bridge its state budget deficit next year.
Together with the Paris Club, the CGI is a vital financing source for helping to plug the gap in the state budget.
Under the IMF's current three year program, Indonesia has been given the right to draw upon $5 billion in loans.
Of this, the government has so far accessed only $1.2 billion.
Citrin's team is in Jakarta to review the progress made in meeting economic targets under the LoI, the third since last year.
Separately, economist Mohamad Ikhsan agreed that an extension of the IMF contract was "the only way to go" for Indonesia ahead of the third Paris Club meeting
Beggars can't be choosers, he said, adding that the IMF had so far been able to keep the economic recovery on track.
According to him, without the IMF's LoI, people with vested interests would lead the country to further economic ruin.
Elsewhere, legislators urged the government to consult with them before extending the contract with the IMF.
Paskah Suzetta, a legislator from the House of Representatives' Commission IX for financial and development planning, said he would call a meeting with the government to clarify the plan as soon as the House began business again on Nov. 20 after its recess.
He said the government should first consult with the House on any crucial decisions regarding the country's economy and the well-being of the people.
Also from Commission IX, legislator Faisal Baasir said that a consultative meeting was needed to avoid future misunderstandings between the government and the House.
"The House has been condemned on many occasions for obstructing the government when, in fact, the government simply did not consult with us regarding its plans," he told The Jakarta Post.
The legislators agreed that an extension of the contract with the IMF was "unavoidable". "There's no other way, we have no other alternative," said Paskah.
Faisal warned that the new LoI should not impinge upon the country's sovereignty, and should help stimulate economic growth.