IMF to send its mission to Jakarta this week

IMF to send its mission to Jakarta this week

WASHINGTON (Reuters): The International Monetary Fund said on
Monday it will send a high level mission to Jakarta this week,
the first move toward ending a six-month deadlock over a US$5
billion loan program.

"The International Monetary Fund will send a review mission to
Jakarta later this week to discuss the third review under the $5
billion (loan) program," IMF spokesman Vasuki Shastry said in a
brief statement.

"The mission will seek to develop a letter of intent that
carries forward the economic program," he added.

In a related development, Indonesian President Abdurrahman
Wahid criticized the IMF over its objections to central bank law
revisions on Tuesday, ahead of a key IMF visit to Jakarta, saying
the IMF should not get involved in microeconomic issues.

Abdurrahman told state-owned TVRI interviewers in Jakarta
the IMF was "too rigid" in its response to the proposed central
bank law changes.

The central bank law revisions have become the most
contentious issue between Indonesia and the Fund and will be the
key to ending the six-month stalemate.

The IMF's strongest objection relates to Article 75 which
stipulates the entire central bank board be replaced when the new
laws come into effect.

Wahid added the Fund should keep not get involved in
microeconomic issues.

"Let business circles decide on the microeconomy," he said.

Earlier, Indonesian chief economics minister Burhanuddin
Abdullah said he believed the mission would arrive on Thursday.

The IMF team will pave the way for a $400 million loan delayed
since December -- more critical to show foreign investors
Indonesia's economic reforms are back on track than for
bolstering the country's reserves.

Donors would also be heartened by the move and the World Bank
has said it could more than double its annual aid program to $1
billion if the impasse was broken.

The team of around 10 officials would be led by IMF Asia-
Pacific deputy director Anoop Singh, and follows indications
Indonesia will revise central bank law amendments -- the issue
which drove relations between the two to rock bottom.

The contentious issue is Article 75 which stipulates the
entire bank board be replaced when the new laws come into effect.

The Fund believes such a clause would threaten the bank's
hard-won independence. An independent report in April also said
the article was a "serious mistake."

Minister Abdullah has said Jakarta would be willing to revise
the amendments and might delay a parliamentary debate on the
changes.

IMF senior representative in Jakarta John Dodsworth said
Indonesia's recent efforts on the central bank law reforms were
likely to appease the IMF executive.

"Basically he (Abdullah) has offered, from the government's
side, a compromise that should be acceptable," he said.

The Fund's last mission to Jakarta in April ended on a sober
note and with a warning the budget deficit could blow out to six
percent of GDP and that the country's economic recovery was at
risk.

But Indonesia has since made inroads on its 2001 budget which
it recently revised, keeping the deficit at 3.7 percent of GDP.

Dodsworth also said the Fund was not overly concerned by a
delay in the strategic stake sale of the country's largest retail
bank, Bank Central Asia (BCA).

Indonesia's broken promise to sell a stake in BCA by December
last year was partly the reason the IMF withheld the $400 million
loan.

"They've gone through to the point of getting bids and I
expect there will be an announcement on those bids soon," he
said.

Indonesia's bank restructuring agency (IBRA), which owns 70.3
percent of BCA, said on Friday it needed more time to evaluate
bids for the maximum 30 percent stake sale.

The powerful agency was to have announced the winning bid last
week as part of efforts to raise desperately needed cash and to
re-energize the government's sluggish privatization program.
Five bidders have been shortlisted for the stake.

In addition to the up to 30 percent stake sale, BCA said on
Monday it was offering a 10 percent stake at 900 rupiah per share
to the public from July 4-6.