IMF to pay RI over time, admits its misjudgment

IMF to pay RI over time, admits its misjudgment

WASHINGTON (Reuters): A senior official said on Wednesday that the International Monetary Fund (IMF) would make its next payments to troubled Indonesia in three installments, and he said the fund misjudged the crisis in its early stage.

Bijan Aghelvi, deputy head of the IMF's Asia and Pacific region, said a proposed US$3 billion payment from a $10 billion IMF loan to Indonesia would not be handed over at one time, although he declined to say exactly what Jakarta would get.

"Initially there was a purchase to be made," he said, referring to the $3 billion the IMF had planned to pay in March.

"That has been divided up into three months, so that total is going to be divided up."

Aghelvi admitted the IMF, whose $10 billion loan forms the largest single part of a $40 billion international rescue deal, had initially misjudged the scale of Indonesia's financial woes and said the financial crisis there was "not over yet."

"At the beginning we thought it was a pure contagion effect, which is ironic as Indonesia's problems have been much worse than other countries in the region," he said, referring to the idea that foreign exchange problems in Thailand had simply spread to Indonesia.

"We thought that a strong macroeconomic program would fix the problem."

A package of IMF-backed economic reforms has already been renegotiated twice, delaying IMF payments beyond that expected when the deal was first signed.

The IMF board meets on Monday to discuss the latest reform program and decide how much to pay.

Bank Indonesia Governor Sjahril Sabirin said in Geneva that the Indonesian government had met all the targets required by the IMF for another disbursement from the loan.