IMF to tighten monitoring of RI economic reforms

IMF to tighten monitoring of RI economic reforms

JAKARTA (JP): The International Monetary Fund (IMF) said
yesterday that a new agreement with Indonesia on economic reforms
would be closely monitored to assure its full implementation.

IMF Asia-Pacific director Hubert Neiss said the government's
Economic and Monetary Resilience Council would monitor progress
daily in cooperation with the IMF, the World Bank and the Asian
Development Bank.

"The credibility of the program depends on its full
implementation," he said in a statement.

Neiss and several other IMF officials spent the last three
weeks in the capital reviewing progress on reforms with
Indonesian officials, and setting new figures and targets.

The IMF has delayed the disbursement of the second $3 billion
tranche of the $43 billion bailout package due to the
government's backtracking on the 50-point reform program agreed
on Jan. 15.

The government complained the January agreement failed to
revive the dying economy. It said several points could not be
implemented on time because their effects would cause social
chaos.

He added that the next disbursement of the loans to Indonesia
would be made after agreed actions were implemented. Neiss did
not disclose the conditions for the disbursement.

The program adapts macroeconomic policies to the deteriorated
economic situation and expands the structural and banking reforms
agreed upon in January.

Neiss said: "The main objectives of the program are to
stabilize Indonesia's financial situation and to establish the
foundations for a resumption of economic growth."

He said the government would soon publish its Economic
Memorandum, containing an outline of the economic program and
specifying the complete set of policy commitments.

"Their resolute and sustained implementation should gradually
restore market confidence and bring the Indonesian economy back
to health," Neiss said.

Separately IMF's First Deputy Managing Director Stanley
Fischer warned yesterday that the jury was still out on whether
Indonesia could implement reforms and the IMF would halt its
program if the promises were not kept.

"We have measures in place and if they are not implemented,
the program won't go ahead. We have no assurance. We cannot have
assurance, given history, that it will be done," Fischer was
quoted by Reuters as saying in Tokyo.

Fischer made the remarks ahead of an announcement by Jakarta
that the International Monetary Fund (IMF) and Indonesia had
completed negotiations yesterday morning and that almost all
sectors of the IMF review had made progress.

Indonesia turned to the fund last October as the rupiah
plunged amid regional economic turmoil. The IMF arranged a $43
billion bail-out package but backsliding on reform prompted a new
agreement in January and there were more delays due to President
Soeharto's consideration of a much-criticized currency board.

Fischer said the only signals the IMF had had so far were ones
that were given by the negotiating team which reported almost on
a daily basis to Soeharto.

"It is not possible for us to go ahead 'no matter what,'" he
said, adding that the IMF would have to see if the system as a
whole was capable of implementing reforms.

Addressing questions on cartels held by Soeharto's family
members, Fischer said structural reform measures included steps
to deal with "monopolies that were an important part of the way
the Indonesian government or the Indonesian economy operated".

He said measures in the program had deadlines and there were
monitoring provisions within the agreement to make sure the
deadlines would be kept. (rid)