Neiss gives green light after government talks

Neiss gives green light after government talks

JAKARTA (JP): International Monetary Fund's (IMF) Asia Pacific
director Hubert Neiss ended his one-week visit late on Friday,
satisfied over Indonesia's handling of the high-profile Bank Bali
scandal.

Neiss said he was satisfied with the result of his talks with
the new government, particularly with the decision to publish the
full PricewaterhouseCoopers (PwC) audit on transactions relating
to the Rp 546 billion (US$80 million at current rate) bank
scandal and to take legal action against the suspects.

"The Bank Bali scandal is resolved. Now the international
community can come in to work with the new government," Neiss
told reporters before leaving for Washington.

The IMF suspended its loan disbursement to Indonesia in the
middle of September after the previous administration of B.J.
Habibie failed to honor its promise to disclose the full PwC
audit.

The Bank Bali scandal centers around the "legally dubious"
transfer of some $80 million from the bank to a private firm
linked to influential government officials and businessmen who
are allegedly close to Habibie.

The PwC report lists the names of people allegedly involved in
the scandal, and receiving a portion of the Bank Bali money.

The IMF is organizing a multibillion dollar bailout for
Indonesia. The IMF has so far disbursed some $9.5 billion out of
its total commitment of $12.3 billion.

Many have said that it is not just the money that matters, but
support of the IMF encourages the return of investor confidence,
a crucial factor for the country's economic recovery.

Before the fund disburses its loan to Jakarta, Indonesia must
first reach an agreement with the IMF on a letter of intent
(LoI), which is basically a set of strategies for Indonesia's
economic programs to be financed by the fund.

Coordinating Minister for Economy, Finance and Industry Kwik
Kian Gie said on Friday the IMF had agreed to send its technical
team to Jakarta next week to start designing a new LoI with the
government economic team.

He said the new LoI is expected to be completed sometime in
the middle of December, and which would be sent to the IMF board
of directors to be used as a basis for the loan disbursement.

Indonesia is expected to receive some $460 million once the
fund approves the new LoI.

The IMF said on Friday it would resume talks in Jakarta next
week on the possibility of resuming lending to Indonesia, which
is anxious for fresh money in the face of a budget shortfall.

"Directors agreed that a mission should resume discussions
over Indonesia's program in Jakarta next week," the IMF said in a
statement.

IMF experts will discuss Indonesia's economic plans, including
the detailed letter of intent, listing the policies Indonesia
plans to adopt.

U.S. Treasury Secretary Lawrence Summers held out on Friday
the prospect of a likely resumption of lending to Indonesia by
the IMF, noting Jakarta had taken some steps to meet IMF
concerns.

Appearing before the Senate Committee on Foreign Relations,
Summers added that he is unable to provide any date for the IMF
to remove its suspension on lending to Indonesia.

"I think there have been some encouraging signs, particularly
with respect to identifying and doing something about some of the
most egregious instances of corruption," Summers told the
committee.

"Certainly, there are a number of other criteria that have to
be met before new lending will take place," he was quoted by
Dowjones as saying. (rei)