IMF to send mission to RI to discuss LoI

IMF to send mission to RI to discuss LoI

WASHINGTON (Reuters): The International Monetary Fund said on Thursday it would send a mission to Indonesia next week to discuss a letter of intent with authorities and set fresh economic targets.

"The dialogue with the Indonesian authorities in specific reform areas of importance to the economic program will be carried forward next week when a staff team is expected to visit Jakarta," IMF spokesman Vasuki Shastry said in a brief statement.

The IMF in January agreed to lend US$5 billion over three years to help mend Indonesia's broken economy. The next disbursement -- they are usually around $400 million -- is expected before the end of December.

Earlier on Thursday, Indonesia's chief economics minister Rizal Ramli denied a report that vital loans from the IMF were under threat. "There is no threat...we are confident (of fresh loans) because we have been working very hard and every day win one or two battles," he told Reuters.

He was responding to a report in this week's Far Eastern Economic Review which refers to a Nov. 8 letter from the IMF suggesting the fund's board might block fresh loans if Indonesia does not speed up economic reforms.

Sources inside the IMF said that the news report went too far and that the IMF had made no such threat, adding that the letter was not unusual. The sources said the letter detailed differences of opinion between the IMF and Indonesia which had already been publicly stated and that the lending program was not at risk as the news report suggested.

They added that the IMF has in the past sent letters to Jakarta threatening to cut off assistance, most notably over issues related to the Bank Bali scandal, but that this latest letter made no such allusions or threats.

It has been a constant battle for Indonesia to meet key economic targets outlined in a series of letters that are tied to regular IMF loan disbursements. In its biggest breach of the agreement, Indonesia in October delayed the stake sales of two leading commercial banks, which would have helped boost ailing market sentiment and government coffers.

Indonesia has been repeatedly criticized this year by the IMF and World Bank for dithering on key reforms and for the lack of transparency in corporate debt restructuring deals.

In April the IMF delayed a $400 million disbursement because Indonesia failed to implement promised measures to tackle its $120 billion corporate debt burden.

But Ramli said Indonesia had recently made good progress under difficult circumstances, many of which were inherited from the autocratic rule of former President Suharto.