IMF to start final review of RI economy

The Jakarta Post, Jakarta

The International Monetary Fund (IMF) will start its final review of the country's economic condition and reform programs on Friday, Minister of Finance Boediono said.

"I will meet a visiting IMF team tomorrow (Friday), as part of a discussion that will probably last until next week," Boediono told reporters on Thursday.

He did not elaborate on the new targets to be discussed, but said they included a review of the past year's economic programs.

The upcoming review will be the eleventh and final review to be conducted under the current four-year, US$5.12 billion loan program with the IMF.

Indonesia signed on for the IMF loan program in 1999 after the 1997-1998 economic and banking crisis. In return for the loans, the country must develop and implement quarterly economic reform targets in a Letter of Intent (LoI), which must be approved by the IMF board of executives in Washington.

Up to now, Indonesia has received $4.7 billion, and if the eleventh LoI is approved, the IMF will disburse the remaining tranche of almost $500 million.

The government has decided not to extend its contract with the IMF when it expires at the end of this year, and has instead outlined its own reform program and economic targets in a document called the White Paper.

Consisting of a set of action targets to meet in the next 18 months, the White Paper has gained praise from various parties, including the IMF.

In its latest loan disbursement in October, IMF first deputy managing director Anne Krueger said, "The government's detailed 'White Paper' laying out the economic strategy will play an important role in maintaining investor confidence after Indonesia's graduation from the current IMF program."

The expiration of the current program not only means that the country will no longer receive financial assistance from the IMF, but also that Indonesia will no longer be eligible for debt rescheduling facilities from the Paris Club of creditor nations.

It is expected that the upcoming discussion would likely include a review on the progress the country has made in stabilizing macroeconomic indicators, as well as in restructuring its banking sector via divestment and privatization programs.

In its bank sales program, the government completed the sale of a majority stake in Bank Internasional Indonesia (BII) last month, and is now preparing the sale of shares in the country's largest micro-financing lender, Bank Rakyat Indonesia, through an initial public offering.

One major issue expected to arise is the Indonesian Bank Restructuring Agency's decision to postpone the sale of a controlling stake in Bank Lippo until next year, due to the low bids it received initially.