Next LoI to IMF will involve fewer targets: Official

Next LoI to IMF will involve fewer targets: Official

JAKARTA (JP): The contents of the government's next Letter of
Intent (LoI) to the International Monetary Fund (IMF) will cover
only about half the number of economic reform targets as are
contained in the current LoI, according to a senior government
official.

Assistant to the Coordinating Minister for the Economy, Dipo
Alam, said on Tuesday that he expected the new LoI to deal with
only some 30 topics as against 67 in the current letter, which
was signed in September last year.

"There will be a reduction of about 50 percent in the next
LoI," he told reporters.

According to Dipo, the new LoI will cover targets such as the
state budget, privatization of state enterprises, and corporate
and bank restructuring.

Dipo predicted that the government and the IMF would sign the
new LoI this week, followed by the disbursement of the latest
tranche of the IMF's stalled loan sometime in August.

The government has been hoping for a more "streamlined" LoI,
with finance minister Rizal Ramli suggesting last week that the
IMF should refrain from interfering in micromanagement issues.

Rizal said he had urged a simpler LoI, stripped of details
concerning divestment and privatization plans.

According to him, making public the names of the companies to
be sold in the LoI would only drive their prices down.

Later in the day, Dipo further said the LoI would also include
a term dealing with the amendment of the central bank law,
although in general terms only.

The IMF is expected to disburse its long delayed US$400
million loan tranche to Indonesia once the Fund's executive board
in Washington approves the new LoI.

An IMF special team, led by the Asia Pacific deputy director
Anoop Singh, has been touring several state institutions over the
past six days since their arrival in Jakarta.

The team made a number of visits to the Indonesian Bank
Restructuring Agency (IBRA), which is in charge of restructuring
bank loans, disposing of assets and taking charge of financially
ailing banks.

On Tuesday, the Fund visited the Oversight Committee, an
independent body supervising IBRA's operation.

The IMF also met with officials from the finance ministry for
further inputs on the state budget and the impact of fiscal
decentralization.

In April, an IMF technical review team demanded that the
government revise the state budget on concerns over a widening
budget deficit.

The plunge in the rupiah and rising domestic interest rates
had threatened to cause the 2001 state budget deficit to widen to
a dangerous level of 6 percent of gross domestic product (GDP).

Last month, the House of Representatives approved the revision
of the state budget, including measures to contain the deficit at
around 3.7 percent of GDP.

Director General of Budgeting Anshari Ritonga said that thus
far the IMF had no objection to the revised budget.

"We only need to discuss some detailed policy measures," he
said without elaborating. (bkm)