Neiss optimistic a new government will continue reforms

JAKARTA (JP): International Monetary Fund Asia Pacific director Hubert Neiss is confident the new government formed after the upcoming elections will remain committed to economic reform.

Neiss said on Tuesday he had some knowledge of the political platforms of the major opposition parties from recent meetings with party leaders.

"I'm optimistic the new government will implement all the reform packages," he said before meeting with Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita.

He said the party leaders were dedicated to the reform programs sponsored by the IMF.

Indonesia is scheduled to hold a general election on June 7, which will be followed in November by the election of the country's president and vice president by the newly formed People's Consultative Assembly.

Some investors are worried key economic reform programs will be discarded by the newly formed administration because many opposition leaders have criticized the programs.

Neiss arrived in Jakarta on Monday for a bimonthly review of the country's economic reform programs.

The IMF is organizing a US$43 billion dollar bailout package, pieced together with other multilateral agencies in November 1997, to help lift Indonesia out of its worst economic crisis in three decades.

Out of the IMF's $12.2 billion loan commitment to Indonesia, it has released some $9.5 billion.

The completion of this week's review is expected to pave the way for the disbursement of some $460 million.

Together with the disbursement of the Japanese Miyazawa aid, Indonesia will receive a total of some $1 billion in aid.

Neiss said on Monday the review would focus on the recovery of state banks' bad assets.

He said both the IMF and the government would discuss new strategies to deal with debtors at state banks.

The Indonesian Bank Restructuring Agency has assumed over Rp 100 trillion in nonperforming loans from the country's seven state banks.

In a recent letter of intent to the IMF, the government was to offer measures to restructure the debts of the 20 largest debtors at the state banks. Their debts were to be either restructured or liquidated.

The 20 largest debtors are companies owned by well-connected businessmen, including a number of former president Soeharto's children.

"The IMF will take a more stern approach to push the debtors to repay their debts," said a government source.

He added that Neiss was scheduled to meet President B.J. Habibie on Wednesday.

The recovery of the bad loans would help finance the government's bank recapitalization program, which is estimated to cost some Rp 500 trillion. (rei/prb)