IMF to disburse loan by the end of August: Akbar

JAKARTA (JP): The International Monetary Fund (IMF) said it expected to disburse its stalled US$400 million loan tranche to Indonesia by the end of August, House of Representatives Speaker Akbar Tandjung claimed on Wednesday.

"Mr. Anoop Singh said the disbursement would be effected sometime late in August," Akbar said referring to the visiting IMF Asia Pacific deputy director, who made a courtesy call on the House speaker.

Most analysts have predicted that the IMF would not make any decision until after the special session of the People's Consultative Assembly beginning on Aug.1.

The Assembly is widely expected to withdraw President Abdurrahman Wahid's mandate, and a new government is predicted to emerge sometime in mid-August.

Akbar said the IMF made no reference to the special session.

"But they did ask me about the political situation, which I clarified to them briefly," he said.

Akbar added that he explained to the IMF about the Assembly's special session and how it could help restore political stability.

Analysts have said that the IMF is likely to defer the loan disbursement until some of the current political uncertainties have been cleared up.

Should a new president be elected, questions will surface over the lineup of the next cabinet and the ministers to be placed in charge of the economy.

Coordinating Minister for the Economy Burhanuddin Abdullah said earlier that he expected a new letter of intent (LoI) to be signed within the week, citing Friday or Saturday as the possible day of signing.

The LoI will contain a set of economic reform targets Indonesia must meet to ensure the continuation of the IMF's financial aid.

Following the signing of the LoI, the IMF team will head back to Washington to submit the document to the IMF executive board for approval, a process that usually takes about two to three weeks.

But IMF First Deputy Managing Director Stanley Fischer said in Tokyo that political and economic instability made it too early to say whether a loan disbursement was possible next month.

"What Burhanuddin says is entirely possible ... not certain by any means because of the potential instability," Fischer was quoted as saying by Dow Jones.

According to him, slow bank and corporate sector restructuring remained a major concern.

Akbar went on to say that the IMF did not specifically mention when they expected a new LoI to be signed.

"But it is most likely that they (the IMF) will complete their work later this week," he claimed.

He said the IMF told him that the latest LoI would cover no new items and was essentially identical to the current one which was signed in September.

"They are discussing the old LoI again, and it appears that there won't be many differences in terms of substance," he said.

Akbar added that the IMF had confirmed to him that the new LoI contained fewer reform targets, as hinted at earlier by government officials.(bkm)