New LoI hailed by economists, analysts
New LoI hailed by economists, analysts
JAKARTA (JP): Economists and analysts hailed the new Letter of
Intent (LoI) signed on Monday by the Indonesian government for
the International Monetary Fund (IMF), saying the targets
outlined in the agreement are rational and attainable.
"All economic reform targets stipulated in the Letter of
Intent are achievable," said economist Pande Raja Silalahi of the
Center for Strategic and International Studies (CSIS).
"With the current economic team, plus high expectation and
optimism, economic targets mentioned in the Letter of Intent can
be achieved," said economist Sri Adiningsih of the Yogyakarta-
based Gadjah Mada University.
After days of intense discussions, Indonesia agreed on Monday
to sign an LoI for the IMF, detailing economic reforms to be
carried out by Indonesia in exchange for financial assistance
from the agency.
The new LoI reveals that the IMF is easing some economic
reform targets in apparent deference to President Megawati
Soekarnoputri's request that donor countries show lenience toward
Indonesia.
According to Pande, the signing of the LoI already constitutes
a concession being made for Indonesia.
"With the signing of the Letter of Intent, we can now knock on
the doors of the IMF, World Bank, Consultative Group on Indonesia
(CGI) and Paris Group for financial assistance and debt
rescheduling," Pande said.
Adiningsih, however, expressed doubt that Megawati's
administration would implement the agreements seriously.
"Indonesia is very good on paper, where in fact the most
important thing is the implementation of agreements outlined in
the LoI," she said.
"If the Letter of Intent is implemented to the fullest, I'm
sure Indonesia's economy will be on track to face future
challenges," Adiningsih added.
"We need to prove that we are implementing the economic
reforms seriously," Pande said.
Megawati, according to Adiningsih, has several advantages in
implementing the economic reforms, including strong support from
politicians in the House of Representatives (DPR), as well as
from international lending institutions and foreign governments.
Market analyst David Chang also welcomed the LoI and said
that, in the long run, the LoI would provide a positive boost to
attracting foreign investors who, according to him, look out for
deals in the late third and early fourth quarter of the year.
"The targets are more achievable," said Chang, who is also
president of PT Vickers Ballas Tamara.
However, he cautioned that, in the short term, the new LoI
would have little impact on the financial market.
The rupiah closed trading weaker at Rp 8,740 against the U.S.
dollar on Monday, compared to Rp 8,730 at Friday's closing.
Dealers attributed the drop to continued high corporate dollar
demand for the payment of foreign debts.
Share prices on the Jakarta Stock Exchange ended mixed on
Monday in thin trade, but late buying boosted the JSX Composite
Index. The index ended up 0.088 point at 441.307. (03)