Indonesia wants IMF to show more flexibility

Indonesia wants IMF to show more flexibility

JAKARTA (JP): Indonesian wants the International Monetary Fund
to show flexibility during negotiations on the country's reform
program, especially on issues which have potential to adversely
affect the poor, such as abolishing certain trading monopolies.

Minister of Finance Fuad Bawazier said yesterday that
Indonesia would basically implement the 50-point agreement and
would dismantle cartels and monopolies.

However, not all points of the agreement will be implemented
on time. In some cases, he said, society was not yet prepared for
the adjustments.

Bulog, the National Logistics Agency, should have surrendered
it's trading monopoly on agricultural commodities, excluding
rice, on Feb. 1. "However, the private sector has not been able
to replace Bulog's role," Fuad told journalists.

"They do not have the necessary facilities, such as
warehouses. So they are not yet ready. Once they are ready, we
will liberalize trade," he added.

Fuad leads the Indonesian delegation to the budgets and
subsidies discussion group, one of five such entities formed by
the IMF and the government to review the US$43 billion reform
package.

The other four groups focus respectively on monetary policy,
banking reform, structural reform and external corporate debt.

Fuad said that due to instability, the government and the IMF
had agreed not to revise the 1998/1999 budget, which comes into
effect next month.

Next years budget has already been revised as a result of
strong pressure applied by the IMF, who felt the first draft to
be unrealistic.

The new budget assumes a rupiah-U.S. dollar exchange rate of
Rp 5,000, crude oil priced at US$17 per barrel and a 20 percent
inflation.

The rupiah is currently trading around the Rp 10,000 level and
oil prices have fallen to US$13 per barrel.

Fuad also said that the government would continue to subsidize
the imports of basic commodities, especially rice, and would
accommodate the subsidy into the budget.

The monetary policy and banking reform groups also met
yesterday at the Ministry of Finance. The Indonesian delegations
were led by Sjahril Sabirin, the central bank governor.

"I cannot comment on the meeting as it is still proceeding,"
Sjahril said.

The structural reform group met at the Ministry of Industry
and Trade, with minister Mohamad (Bob) Hasan leading the
Indonesian delegation. IMF Asia Pacific director Hubert Neiss led
the donor organization's team.

"We're in the middle of discussions, it's not appropriate to
get into any details or substance of the discussions," Neiss said
after yesterday's meeting.

"Once we've finished, I'll be happy to talk to you again," he
added.

Hasan said that "discussions will continue."

Following the meeting, Hasan met with World Bank country
director Dennis de Tray for discussions on the Indonesian
economy.

"We talked about projects here and reforms .... issues
associated with reestablishing confidence in the Indonesian
economy," de Tray told reporters after the meeting.

De Tray said they also discussed the need to move banking
sector reforms forward very quickly and on how to resolve the
corporate debt problem.

A meeting was also held between the IMF and the government's
debt settlement team at the National Development Planning Board's
office. The Indonesian delegation was jointly led by State
Minister for the Empowerment of State Enterprises Tanri Abeng and
Radius Prawiro, chairman of the debt settlement team. The meeting
ended on an optimistic note.

Radius said the meeting yesterday was "full of sincerity to
formulate the best way to quickly solve the external corporate
debt problem."

"It is important to quickly solve the debt problem because
rebuilding foreign investor confidence in this country depends on
how we solve this problem," Radius told journalists following the
meeting.

He stressed that as a member of the IMF, Indonesia had the
right to ask for aid and assistance.

"If there are problems we should be able to solve them by
discussion," he said, referring to an impasse between the
government and the IMF over delays in disbursing the second
tranche of aid from the IMF rescue package worth US$43 billion.
(08/das/rid)