Indonesia to need IMF help for some time, says Fischer
Indonesia to need IMF help for some time, says Fischer
WASHINGTON (Reuters): Indonesia will need help from the International Monetary Fund (IMF) for some time, but more tasks should shift to the World Bank once economic stability is guaranteed, the fund's deputy head said on Friday.
IMF First Deputy Managing Director Stanley Fischer told Reuters in an interview that Indonesia needed both the cash and the "policy framework" that went with an IMF-supported program of economic reform.
Noting that the IMF and Indonesia had adapted their economic plans to meet the wishes of new coordinating minister Rizal Ramli, he added: "There is room for compromise and agreement and I think what Mr Ramli wants to do is reasonable.
The IMF neither wanted, not was able to insist on "every last detail" of things that needed to be done in Indonesia, he added.
The IMF put together a US$3 billion international rescue package for Indonesia in November 1997 as the crash of its currency the rupiah exposed a fragile economy and a flimsy financial system.
But the economic transformation remains patchy and reform programs, some of them containing surprisingly large amounts of detail on a range of economic issues, have been revised repeatedly.
Indonesia on Thursday submitted its latest letter of intent to the IMF outlining economic plans. The document, which paves the way for a new injection of IMF cash, put responsibility for drafting economic plans firmly in the hands of the Indonesian authorities.
"It is clear that Indonesia at the moment needs external financing and the sort of policy framework that comes with an IMF-supported program...to provide the assurance both inside and outside on the types of policies to be followed," Fischer said.
"I think we will be there for a while, but I hope that as Indonesia wins confidence and as the system stabilizes that we will recede more and more into the background."
The IMF is traditionally responsible for broad fiscal, monetary and macroeconomic aspects of a country's economic transformation. It shares responsibility for financial sectors the World Bank, which has also been heavily involved in Indonesia.
"As macroeconomic stability is maintained, the World Bank's role in the structural side should be enhanced," Fischer said. "Our role will be to work together with the World Bank and the Asian Development Bank. We will maintain an interest in the financial sector and in corporate restructuring but we will not be designing these programs -- that will be the World Bank."
The IMF's board of directors had been due to meet last week to approve additional money for Indonesia, but that meeting was postponed as the two sides fine-tuned their economic plans. IMF figures show Indonesia owed the fund some $10.3 billion at the end of July.