Nellor upbeat RI can graduate from IMF plan

Dadan Wijaksana, The Jakarta Post, Jakarta

The International Monetary Fund (IMF) is confident about the prospect of Indonesia graduating from the Fund-sponsored economic reform program later next year, as long as the country can demonstrate a sound commitment toward its economic reform policies.

David Nellor, the Fund's senior representative in Jakarta, told reporters on Thursday the government has to focus on its reform policies as a sign that it no longer needed IMF assistance.

"Well, every focus today has to be on getting all policies in place... and everything can be completed in the course of this program so Indonesia would no longer need exceptional financial support beyond this program," Nellor said.

He was speaking prior to a discussion here on the IMF's role in Indonesia.

When pursued whether he was confident that the country would graduate, Nellor replied: "Yes."

The words of confidence were the first coming from the Fund's officials amid seemingly endless debates, over whether the country should maintain the role of the IMF in the country when its economic reform program expires at the end of next year.

The statement came only days after comments in this paper from economists at top foreign banks voicing confidence that the country can free itself from the IMF intensive care unit, provided the current relatively positive progress in macroeconomic indicators can be retained, and that the government can show its commitment to the reform program.

The current three-year IMF program was supposed to end later this year, but the government extended it for another year in April in a bid to obtain a rescheduling facility for sovereign debts maturing in 2002 and 2003 from the Paris Club of creditor nations. The creditor grouping would only provide the rescheduling facility if the IMF supported it. As the government will also need this facility in 2004 to help ease the burden of the state budget, it was important that Indonesia leave the IMF program in an orderly way so that the Fund would still support the country at the Paris Club forum.

Graduating from the program is seen as critical, according to ING Securities, as it would not only make the government more independent in pursuing its policies but would also improve the nation's sovereign rating.

The IMF has been supporting Indonesia since 1998 under the financial assistance program to help it recover from the regional economic crisis.

Recently, however, calls have been growing for the government to quickly end the IMF program here, some arguing that the program can at times prove harmful to the country.