Indonesia hopeful on prospects for IMF talks

Indonesia hopeful on prospects for IMF talks

WASHINGTON (Reuters): Indonesia's Foreign Minister Alwi Shihab said on Monday he was hopeful about the prospects for progress in talks with the International Monetary Fund over a crucial US$400 million loan.

In an interview with Reuters, Shihab blamed Indonesia's parliament for creating some of the delays in introducing reforms which in turn have stalled discussions with the IMF.

"We sometimes have difficulties in convincing our parliament, so the delay sometimes is not because of the government but because of the parliament...," Shihab said.

"But so far I am confident that the IMF is quite reasonable and understanding of the situation. So I am hopeful that they will resume activities (and) return to Indonesia to ... resume discussion," he said.

IMF head of external relations Tom Dawson told a news briefing on Monday that the Washington-based lender would continue to have useful discussions with Indonesian officials, but added major issues needed to be overcome.

"We do expect future discussions will be held and are hopeful for additional progress," Dawson said, adding that the situation had not changed substantially in recent weeks.

The loan, part of a $5 billion facility, has been delayed since December while negotiations dragged on over issues such as the independence of Indonesia's central bank, borrowing by regional governments and transparency in asset sales. Progress in these talks is needed for the IMF to take the next step by sending a mission to Jakarta.

Shihab would not hazard a guess on when such a mission might be sent, and Dawson also said no date had been set.

This is the third time in the past year that the IMF has delayed loans from the three-year program as Indonesia struggles with economic reforms and a series of political crises.

Without IMF backing, Indonesia will have trouble with its key donors, such as the Paris Club of official creditors, and confidence in the economy would further erode.

Indonesian officials have kept an optimistic face on the prospects for a breakthrough, however.

On Friday, a senior official at Indonesia's chief economics ministry told reporters he expected that the outstanding issues would be resolved in March, and added that an IMF team would arrive in Jakarta "soon."

Shihab was in Washington to meet U.S. officials, including Secretary of State Colin Powell, and attend a day-long conference of the U.S.-Indonesia Society on Tuesday on Capitol Hill.