IMF waiting for amendment of central bank law

JAKARTA (JP): The International Monetary Fund (IMF) will disburse its next loan tranche to Indonesia only after the House of Representatives completes a crucial amendment of the central bank law, Minister of Finance Prijadi Praptosuhardjo said on Tuesday.

Prijadi said a credible central bank law was crucial to maintain investor and market confidence in the economy.

"They (the IMF) want to see the amendment completed first," he said on the sidelines of a gathering to mark the breaking of the fast with journalists at his house.

Prijadi added that the IMF was ready to provide its expertise and knowledge about central bank legislation if the House wanted some input.

The IMF was supposed to disburse a US$400 million loan to the country at the end of this month, but it decided last week to delay it until February or March next year. There was no explanation from the fund.

The fund promised in January this year to provide a $5 billion loan to the administration of President Abdurrahman Wahid to help finance the country's three-year economic reform program.

The House is deliberating government-proposed amendments to the central bank law.

Critics have said the amendments were aimed mainly at making it easier for the government to meddle with Bank Indonesia, including replacing its board of governors, especially incumbent governor Sjahril Sabirin, who has fallen out of President Abdurrahman's favor.

Abdurrahman has been calling on Sjahril to resign since February.

Coordinating Minister for the Economy Rizal Ramli has, however, repeatedly argued that the delay in the IMF loan disbursement had nothing to do with the government's performance regarding its reform measures.

Rizal instead blamed the delay on technical matters related to a "scheduling" problem or the itineraries of the IMF executive board in Washington.

Rizal pointed out that discussions between the government and the IMF review team on the economic reform program could not be implemented as scheduled due to year-end holidays.

The IMF normally disburses its loan once it has completed a review of the government economic reform program.

Reports have said the delay in the IMF loan was linked to the government's failure in implementing key economic programs.

The IMF has been irked by the recent delay in the key sale of government ownership in Bank Central Asia and Bank Niaga. The government was supposed to sell the two banks late this year but it decided to delay until the first quarter of next year.

The IMF has also expressed concern over the risk in the implementation of the regional autonomy and fiscal decentralization policy in January 2001.

The IMF has demanded the government to issue a special ruling to ensure that provinces and regencies do not jump into a borrowing spree once the autonomy policy is implemented.

Prijadi said the delay in the IMF loan would not seriously affect the economy because it was basically a second line of defense for its international reserves and the delay would only be for a couple of months.

Prijadi stressed the government remained committed to implementing the various economic reform programs agreed with the IMF.

He said he had promised the IMF that the government would accelerate the disposal of various banking assets under the Indonesian Bank Restructuring Agency (IBRA) and the privatization of state companies.

Prijadi said eight state-owned enterprises were in the pipeline for privatization next year to raise Rp 6.5 trillion for the state budget.

He added that the companies to be privatized included pharmaceutical companies PT Indo Farma, PT Kimia Farma, surveyor company firm PT Sucofindo, airport operator PT Angkasa Pura II and several plantation firms. (rei)