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.