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)