IMF to disburse another $1 billion this month

JAKARTA (JP): The International Monetary Fund (IMF) will disburse the next $1 billion loan payment to Indonesia at the end of this month, Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said yesterday.

"The next loan disbursement will take place in late August," Ginandjar told reporters after speaking at the National Deliberative Council of the Association of Indigenous Business People.

He said the IMF would hold a board meeting in the coming weeks and by the end of this month the much needed money would be released to the country.

The money will be used to boost the central bank's foreign exchange reserves, he said.

Indonesia has received $5 billion from the IMF since October. The fund is leading a $43 billion international bailout package put together to help Jakarta get its economy back on track.

The fund suspended payments in May following the massive riots which led to the resignation of former president Soeharto, but resumed assistance to the country with a $1 billion loan installment last month.

The bailout package is being released in monthly $1 billion installments on receipt of satisfactory progress reports on the reform program from the government.

Economic targets set jointly by the government and the IMF have had to be revised several times as the economic downturn continued to worsen.

The most recent progress report was sent to the IMF last week following completion of the fund's monthly review of the reform program.

In the most recent progress report, the country's economy was forecast to shrink by 15 percent in the 1998/1999 fiscal year, higher than the previous estimate of 12 percent.

The current account deficit was forecast to reach 8.5 percent of gross domestic product in the current fiscal year.

Ginandjar said he expected the economy to return to positive growth by the year 2000.

"Economic growth thereafter will be more sustainable because our economic fundamentals will be stronger and more resistant," he said.

He said inflation would return to single figures within two years, and claimed the budget would be balanced again in three years time.

The IMF and other donor countries last month pledged to increase the bailout aid package by $6 billion due to worsening conditions in the Indonesian economy.

Also last month, countries belonging to the Consultative Group on Indonesia (CGI) agreed to provide $7.9 billion in additional financial assistance to help the country through its economic difficulties. (das)