Mon, 10 Apr 2000

IMF to disburse loan to Indonesia soon

JAKARTA (JP): The International Monetary Fund (IMF) is expected to disburse US$400 million in loans to Indonesia later this month, according to Cabinet Secretary Marsillam Simanjuntak.

Marsillam said on Saturday an IMF team would come to Jakarta on April 21 to review the implementation of economic reform programs promised by the government in January.

He said that the result of the review would be sent to the IMF executive board at its headquarters in Washington to decide on the second-tranche disbursement from the IMF $5 billion bailout fund for Indonesia for the 2000-2002 period.

"We hope that one week after the visit of the review team, the IMF will disburse the money," Marsillam said following a meeting with President Abdurrahman Wahid.

However, the IMF chief representative in Jakarta, John Dodsworth, said late last month that even though the review could be completed in the first half of April, the second disbursement of loans would probably take place only in mid-May at the soonest.

"After the review, it needs about three weeks until the IMF executive board in Washington can meet," Dodsworth said in explaining the delay.

The IMF was meant to disburse the aid on April 4 on condition that the government had implemented all the economic reform measures it promised in January by the end-March deadline.

The key economic programs to be implemented are contained in a letter of intent sent to the IMF.

But the government failed to meet the March 31 deadline for some 108 "items" in the letter, prompting the IMF to delay the aid disbursement.

The government proposed last week new deadlines of April 8 and April 12 for 42 items demanded by the IMF as a prerequisite for the aid disbursement.

IMF Jakarta chief representative John Dodsworth said last week that the Fund would disburse the money in May if the government could meet the new deadlines.

Marsillam said that Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie handed over to the President on Friday evening a document reporting that the 42 items of the letter had been implemented.

"I don't know how many items exactly, but I think all have been implemented because without this the government team could not leave for Paris," he said.

A delegation of senior government officials and Presidential economic advisers left Jakarta on Saturday for Paris to attend the April 12 to April 13 meeting of the Paris Club creditor nations grouping.

The government has proposed to reschedule some $2.1 billion in sovereign debts to the grouping to help ease the pressure on the 2000 state budget.

Completing the economic reform programs will provide Indonesia with key IMF support for the approval of its debt rescheduling proposal to the creditors grouping.

The Indonesian delegation will be led by Kwik and Finance Minister Bambang Sudibyo.

Marsillam said that the IMF review team was supposed to come to Jakarta on April 30, but it decided to move the visit forward to April 21.

Marsillam did not explain why the schedule was changed.

Reports that the government had failed to meet the IMF deadlines had caused a serious blow to confidence in the country as reflected from the declining of the value of the rupiah against the U.S. dollar last week, which plunged to near the Rp 8,000 per dollar level, compared to Rp 7,400 last month.

But Bank Indonesia Governor Sjahril Sabirin said on Friday that he expected the rupiah to strengthen again once the IMF released its money.

Several senior government officials had said earlier on Friday that many parts of the 42 items in the letter had been completed.

State Minister for Investment and the Development of State Enterprises Laksamana Sukardi said that programs related with the Jakarta Initiative Task Force had already been completed.

The task force is a corporate debt restructuring agency established by the government in early 1998 to break the impasse between local debtors and (mostly) foreign creditors.

The Indonesian Bank Restructuring Agency's chairman, Cacuk Sudarijanto, said that it had completed nine out of 14 programs related to the agency.

The $400 million IMF loan is part of a $5 billion loan promised by the fund to the newly formed administration of President Abdurrahman to help finance the country's new economic reform programs over the next three years. (rei)