IMF to start final review of RI economy

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.