IMF's Fischer arrives for review of reform

IMF's Fischer arrives for review of reform

JAKARTA (JP): International Monetary Fund (IMF) Acting
Managing Director Stanley Fischer plunged into a series of
meetings on Sunday with senior officials immediately after
arriving here to review Indonesian reform programs.

Fischer met with Attorney General Marzuki Darusman to discuss
the latest developments in judicial reform, one of the most
important elements of the country's reform programs.

Fischer, who is acting chief of the IMF until the installation
of Horst Koehler as new managing director to replace Michel
Camdessus, also held a meeting with finance minister Bambang
Sudibyo later in the evening.

He held a brainstorming session with several economic advisors
to the President, including Emil Salim, Sri Mulyani Indrawati,
Faisal Basri, Boediono and Bambang Subiyanto.

"The main reason for my visit is to reassure President Wahid
of the IMF's support for Indonesia's economic program," Fischer
said earlier in an arrival statement.

The IMF acting chief is scheduled to meet with President
Abdurrahman Wahid on Monday morning and later with House of
Representatives Speaker Akbar Tandjung.

The review, the first to be made of Indonesian reform measures
after the renewal of the IMF bailout program for the country on
Jan. 20, is almost one month behind the original schedule as the
government failed to meet many of the reform deadlines.

The multilateral agency, disappointed with the Indonesian
government's failure to implement many reform measures on
schedule as agreed on in the Jan. 20 letter of intent, held up
the second disbursement of its loans, originally planned for
early this month.

Fischer, however, said on Sunday he was encouraged by the pace
of Indonesia's economic reform over the past few weeks.

He nevertheless warned that the government must not waver from
the program demanded by the IMF.

"I'll explain how it's essential to keep the program on
track," he said of his upcoming meeting with President
Abdurrahman on Monday.

Fischer added he was also encouraged by the favorable Paris
Club meeting on April 12, which agreed to reschedule US$5.8
billion of Indonesia's official debts, due to mature between
April 2000 and March 2002.

But the Paris debt rescheduling agreement still depends on the
IMF review on Indonesian reform programs this week.

"We are hopeful that the mission, which will start its work
under Mr. Anoop Singh's leadership within the next few days, will
be able to make a positive recommendation on the completion of
the review," Fischer added.

Singh is the new IMF director for Asia and the Pacific region,
replacing Hubert Neiss.

The IMF chief representative here, John Dodsworth, said
recently that if all went according to the new schedule,
Indonesia could expect the IMF executive board to approve the
release of the second tranche of $400 million in loans some time
in mid-May.

Coordinating Minister for the Economy, Finance and Industry
Kwik Kian Gie said last week the government had implemented more
than 90 percent of the reform measures.

The IMF has been demanding urgent measures, especially in
debt, bank and corporate restructuring.

Fischer said positive developments had been made in the
framework for corporate restructuring.

Sri Mulyani later told reporters that the IMF was keenly
following the preparations being made for the decentralization of
political and economic power to the provinces and districts.

"The IMF sees a broader autonomy for the regions as the best
way of empowering local administrations," added Mulyani, the
secretary of the National Economic Council.

But the IMF also cautioned that local administrations should
be fully aware of the macroeconomic and fiscal consequences of
the decentralization process, she said.

She said Fischer also touched on a recent complaint from
Bambang who said the pressure from the IMF was too excessive on
the Indonesian government with regard to the implementation of
reform measures.

Fischer, Mulyani said, suggested that the IMF and the
government engage in more vigorous discussions on reform measures
to develop a better understanding.

She said the IMF would also closely examine the bank
restructuring program and the imposition of value-added tax and
luxury sales tax on domestic sales on Batam, Bintan and Karimun
islands.

The taxes, which are supposed to be collected as of this
month, have been opposed by locals and businesses and many
foreign investors.

Fischer will leave Indonesia after addressing a news
conference at the House of Representatives following his talks
with Tandjung on Monday.