Indonesia envoy sees IMF mission in RI by March

Indonesia envoy sees IMF mission in RI by March

WASHINGTON (Reuters): Indonesia's differences with the
International Monetary Fund are narrowing and significant
progress over a stalled US$400 million loan could be seen by the
middle of March, Jakarta's envoy to the United States said on
Friday.

Ambassador Dorodjatun Kuntjoro-Jakti told Reuters in an
interview he was confident the two sides would reach an
agreement.

"What we see is narrowing differences. The message has to be
discussed in Indonesia in the cabinet... and worked out by our
team here," Kuntjoro-Jakti said.

"And of course after an exchange of letters I hope probably --
by the latest probably the middle of March -- we will see the
return of a team to Jakarta. And after that maybe will be a
disbursement, I hope, in the weeks after that," he said.

The crucial loan, part of a $5 billion facility, has been
delayed since December while negotiations between Jakarta and the
world lending body dragged on, stumbling over such key issues as
the independence of the central bank, local government borrowing
and transparency in asset sales.

Progress in these talks is needed for the IMF to be able to
announce a date for a mission to Jakarta -- the next step in
freeing up the funds.

This is the third time in the past year the IMF has delayed
loans from the three-year program as Indonesia struggles with its
economic reforms and a series of political crises including the
latest violence in Borneo in which nearly 500 people have been
killed.

Without IMF backing, Indonesia will have trouble with its key
donors -- like the Paris Club of creditors and the Consultative
Group for Indonesia -- and confidence in the economy would
further erode.

The delay comes at a crucial time for Indonesia's first
democratically elected President Abdurrahman Wahid, who faces
criticism for traveling abroad despite all his country's problems
and mounting political pressure after parliament formally
censured him for his role in two financial scandals.

Although the IMF was hailed as a hero when it helped Indonesia
after the economy collapsed in 1997, it is now often labeled
meddlesome in Jakarta.

Coordinating Minister for the Economy Rizal Ramli, who
recently came to Washington for talks with the IMF that yielded
little, recently accused it being too pushy.

Kuntjoro-Jakti, a U.S.-trained economist who has had broad
involvement in Indonesia's regional and commercial agreements,
was supportive of the process, however.

"For me this is a blessing in disguise that we have this
problem now, rather than later," he said.

"Yes, it caused a delay from December already to March now
probably, but if it is part of the learning curve ... why not?
For me any maneuver, if it's based on trust, really hinges on the
fact that both honor the international agreement."

The problems being discussed with the IMF were the inevitable
consequences of greater democracy, Kuntjoro-Jakti suggested.

The newly-empowered parliament should be blamed for the
slowness in asset sales while the limited power of regional
governments to borrow was the price Indonesia had to pay for
decentralization, he said.

On the independence of the central bank, he said Indonesian
officials and the IMF did not disagree.

"I hope that the understanding is now that some of the issues
will not be treated as issues that need to be geared to a time
schedule... This is a give and take situation as I see it and is
now beginning to be understood by everybody involved," he said.

Kuntjoro-Jakti said he looked forward to U.S. involvement in
negotiations not only connected with the IMF but also the World
Bank, the Asian Development Bank and the World Trade
Organization, but added it was early days yet for the new
administration of President George W. Bush.

"So far we haven't seen anybody yet," he said.