Indonesia banks on extra $1b from IMF

Indonesia banks on extra $1b from IMF

MONTEGO BAY (Reuters): Indonesia is on the road to recovery from its deep financial crisis and is seeking an extra US$1 billion from the International Monetary Fund, chief economic minister Ginandjar Kartasasmita said on Thursday.

Ginandjar, speaking on the sidelines of a developing country summit in the Jamaican resort of Montego Bay, told Reuters that he expected the Indonesian economy to return to growth in the second half of this year and experience modest growth next year.

"We have seen the light at the end of the tunnel," he said. "We are very confident that we will soon be out of it."

Indonesia was one of the first victims of a global economic crisis that started in Thailand in July 1997 and spread across Asia to Russia and Latin America.

It has already received billions of dollars from the IMF, the World Bank and the Asian Development Bank as part of a $43 billion international rescue package.

But Ginandjar said Jakarta was now looking for an additional $1 billion of IMF funds to unlock money promised under Japan's $30 billion Miyazawa Plan designed to bail out Asia's crisis-hit economies.

"We need the extra funds from the IMF to be able to get more money from Japan," he said. "Japan, with the Miyazawa Plan, is insisting that it should be co-financed with the IMF."

Ginandjar said Indonesia had almost completed a letter of intent to the IMF detailing its future economic plans, although any agreement on new money would be subject to the approval of the IMF executive board.

"By March we already will probably know whether this proposal has been approved by the board," he said.

The Indonesian minister has been attending this week's summit of the Group of 15 developing countries, comprising 17 nations from Asia, Africa and Latin America.

He admitted he was surprised at the depth of resentment among some summit participants about the IMF, which many delegates accuse of responding inappropriately to the problems in Asia and beyond.

Malaysian Prime Minister Mahathir Mohamad, long a fierce critic of the fund, said IMF demands are stifling domestic firms and threatening to rob Asia's once-proud tiger economies of their independence.

Jamaican Prime Minister P.J. Patterson, the summit's chairman, said the IMF has bailed out creditors "while leaving debtors in the lurch."

"We know Mr. Mahathir has always had strong views... and we know that he likes to make bombshells in public," Ginandjar said.

"As members of the IMF we have the right to ask for assistance when we are in a financial crisis," he said. "They have been helping us and we have seen some results."

Ginandjar noted that the IMF had admitted it made mistakes at the early stages of Asia's economic crisis, underestimating the scale of the problems and insisting -- wrongly -- that countries run big budget surpluses.