IMF to disburse new loan to RI in January: Neiss

IMF to disburse new loan to RI in January: Neiss

JAKARTA (JP): The International Monetary Fund will disburse
its next tranche of loans to Indonesia immediately after the
government presents in January its next state budget draft to the
House of Representatives, visiting IMF Asia Pacific director
Hubert Neiss said on Monday.

After meeting with senior Indonesian economic ministers, Neiss
told journalists the government would unveil the April-December
2000 state budget in the middle of January.

Neiss arrived in Jakarta on the weekend to finalize talks over
the country's new letter of intent (LoI) to the IMF.

The LoI comprises Indonesia's basic economic strategies to be
financed by the fund.

The fund is organizing a bailout cash package worth US$46
billion for Indonesia, of which the IMF is committed to provide
some $12.3 billion. It has so far disbursed more than $9.5
billion.

Indonesia must first complete a new LoI, and the IMF board of
directors must give its approval to the LoI before the fund
disburses a new loan.

Neiss said that some 90 percent of the LoI content had been
completed, but added that the final version would be completed by
the end of this year.

"I think the LoI will be published at the same time as the
budget," Neiss said.

Neiss will take the new LoI to Washington for approval.

Indonesia is expected to receive $460 million in the new IMF
loan.

The new loan was supposed to be disbursed in the middle of
September, but the IMF suspended the disbursement following
revelations in the high-profile Bank Bali scandal.

The bank scandal centers around the legally dubious transfer
of some $80 million from Bank Bali to a company linked to former
president B.J. Habibie's group in the giant Golkar Party.

The IMF delayed its loan disbursement after the previous
administration of Habibie declined to publicly disclose the
PricewaterhouseCoopers (PwC) audit report into the Bank Bali
scandal.

The new administration of President Abdurrahman Wahid
published the PwC report last month, prompting the IMF and other
international donors to resume talks with Indonesia.

Tough issues discussed in the new LoI include agreements on
how the government intends to reduce its fuel and electricity
subsidies in the next state budget.

The IMF and the World Bank have pushed the government to
reduce its subsidies to allow the country to have a sustainable
budget and to prevent corruption.

But the government is unwilling to cut the subsidies
drastically as it would push prices upward and might create
social unrest.

The government is also determined to impose import tariffs on
rice and sugar commodities in a bid to protect the local farmers.

The IMF has given the green light to the plans but has yet to
agree on the size of the import tariffs.

Starting with the new budget, the government also plans to
reduce foreign borrowing in a bid to reduce the country's
dependence on foreign loans.

The government is set to unveil the next budget in the middle
of January after the Moslem Idul Fitri celebration on January 8
and 9.

The government usually unveils the budget draft in early
January.

It usually takes a month for legislators to approve the budget
draft.

The next state budget will be a calender year budget ending in
December. The current 1999/2000 state budget is a fiscal year
budget ending in March. (rei)