Paris Club meeting likely to go ahead
Paris Club meeting likely to go ahead
JAKARTA (JP): Minister of Finance Prijadi Praptosuhardjo said
here on Wednesday that uncertainty regarding the International
Monetary Fund's (IMF's) review on Indonesia's economic reform
program would not affect the Paris Club meeting.
The minister said that he hoped the international creditors in
the Paris Club would go ahead with their meeting in April.
According to the minister, the meeting which would discuss the
Indonesian proposal to reschedule part of its sovereign debts is
very important to lift the country out of the crisis.
The Paris Club agreed last year to reschedule Indonesia's
sovereign debts worth $5.8 billion.
Analysts said that worsening relations between Indonesia and
the IMF would have a great impact on the country's credibility in
the eyes of the international community.
Without IMF backing, Indonesia will have trouble with its key
donors -- like the Paris Club of creditors and the Consultative
Group for Indonesia -- and confidence in the economy would
further erode.
Indonesian officials told reporters earlier this week that the
fund will send a team on Thursday, but were unclear whether the
visit would constitute an official mission.
The IMF, however, declined on Wednesday to confirm the visit.
"We have no comment or information on this report," Vasuki
Shastry, a spokesman for the IMF, told Dow Jones.
The uncertainty regarding the Fund's review would not only
prolong the delay in its loan disbursement to Indonesia but also
could affect the meeting of the Paris Club, which has regarded
the Fund's review as an important gauge for its future debt
facilities.
The IMF has delayed a $400 million tranche of its $5 billion
loan to Indonesia since December amid concerns that the country
is not moving fast enough on economic reforms.
Indonesia moved to patch up relations with the IMF last week
by making progress on some missed economic reform targets within
its agreed program.
A major reason behind the delay of funds last year was the
government's failure to sell PT Bank Central Asia and PT Bank
Niaga, two nationalized institutions, by the deadline at the end
of 2000.
The legislature, which had blocked the sales on grounds it
would involve selling assets cheaply to foreigners, reversed its
position last week.
The government also said last week that provincial governments
could only borrow money after central government approval.
New laws which give power to the provinces over revenues and
expenditures from this year have drawn criticism from the fund,
which is concerned the regions could build up a huge debt,
worsening Indonesia's fiscal position.
The IMF is also worried that plans to amend the central bank
law, making it easier for the government to fire the governor,
could lead to political meddling in monetary policy.
Indonesia has said it plans to push ahead with the amendment,
which could still form a major stumbling block with the fund,
analysts say.(03)