Indonesian budget meets economic aims, IMF says

Indonesian budget meets economic aims, IMF says

WASHINGTON (Reuters): The International Monetary Fund gave Indonesia's new budget a seal of approval on Tuesday, and said the spending plans were broadly in line with the aims of Jakarta's IMF-backed program of economic reforms.

"Our preliminary assessment is that Indonesia's 1999-2000 budget, announced by President B.J. Habibie today, is broadly consistent with the objectives of the IMF supported program," an IMF spokesman said.

Habibie presented his budget in Jakarta on Tuesday, predicting a deficit of 4.8 percent of gross domestic product and zero economic growth in the year from April.

This is a steep improvement from the 12 percent drop expected in the current financial year.

Financial markets have already reacted positively and Jakarta shares rose 3.6 percent on relief that the budget appeared more realistic than one presented last year and then revised four times.

IMF experts are due to visit Indonesia later this month and, depending on their report and their assessment of the budget and other government plans, the fund could then approve additional payments from a loan approved in 1997.

The IMF has already handed out almost $9 billion of $11 billion in loans to Indonesia, which was the second major victim of the economic storm which started in Thailand 18 months ago.

The Indonesian authorities said on Tuesday they would need additional loans to meet their 1999-2000 budget plans and help the poor survive a devastating economic crisis.

Donors, including representatives from the World Bank, the Asian Development Bank and from individual countries are due to meet in Jakarta later this month.