IMF welcomes economic progress

IMF welcomes economic progress

Dadan Wijaksana, The Jakarta Post/Jakarta

A visiting team from the International Monetary Fund (IMF) has
recognized early signs that the administration of President
Susilo Bambang Yudhoyono is serious about improving the business
climate here.

While it is still early, efforts to resolve high-profile legal
battles with Mexican cement firm Cemex SA and U.S.-based power
firm Karaha Bodas Company (KBC) will strengthen the business
climate, according to Daniel Citrin, IMF's deputy director for
Asia and the Pacific.

"The fact that the government wants to try to resolve the
problem and open dialog with the other sides, showing the
willingness to normalize the situation, that's already a good
sign," Citrin, who heads the visiting team, said on Monday.

Resolving these types of problems should help speed up the
recovery of investor confidence in the country, Citrin added.

Negotiations between the government and Cemex and KBC are now
underway to try to seek out-of-court settlements to put an end to
protracted legal disputes.

The initiative to resolve the cases was taken by Susilo's
economic team, which has pledged to improve the business climate
and boost investment performance, which has been in the doldrums
in recent years.

Citrin said the fund was encouraged by the government' focus
on improving the investment climate and would support it in any
way possible.

"The policy priorities of the new government -- that is to
continue the progress made in macro stability and to step up the
drives to curb corruption and the high-cost economy, and efforts
in legal reform -- are very appropriate and correct," Citrin
said.

"These are all something that we will fully support."

Indonesia is in dire need of investment to generate higher
economic growth. The economy is targeted to grow by 4.8 percent
this year, but, as in previous years, that growth will be driven
mainly by domestic consumption.

The visiting IMF team arrived here for a one-week visit to
discuss economic policies with top government officials,
legislators, business leaders and others.

The visit is part of twice-a-year regular dialogs between the
IMF and Indonesia under a post-program monitoring system -- a
program applied to an IMF member nation after it completes its
lending program.

Indonesia ended an IMF-sponsored economic reform program at
the end of last year. The IMF provided billions of dollars to
bail out the economy following the late 1990s financial crisis.

Citrin painted an upbeat outlook for the country's economy,
which has progressed fairly well this year.

"Macro (economic) performance has been quite good, inflation
is going down, GDP growth is picking up -- strong enough to start
bringing the employment rate down," he said.

"So, the overall economic performance, I think, has been quite
favorable," added Citrin.