Prijadi sees no big problems affecting IMF review

Prijadi sees no big problems affecting IMF review

JAKARTA (JP): The government could not see any major problems
affecting talks with the visiting International Monetary Fund
(IMF) mission scheduled to start on Wednesday, Minister of
Finance Prijadi Praptosuhardjo said on Tuesday.

The finance minister said that the government had basically
met all requirements demanded by the IMF.

"I don't see any big problems ... because the requirements
have been fulfilled," he told reporters.

The long-awaited visit by the IMF mission is expected to pave
the way for the disbursement of a crucial US$400 million loan
tranche to the country, which has been suspended since late last
year.

The mission, led by IMF deputy director for the Asia Pacific
region, Anoop Singh, arrived in Jakarta late on Tuesday.

Noted economist Sri Mulyani said that the IMF review team's
visit would bring the country closer to disbursement of the IMF
loan.

Sri said that the IMF would not send its mission if a
considerable chance of failure in reaching a new agreement with
the government existed. "So far, the signs are quite optimistic,"
she said.

The IMF canceled in December the disbursement of its fourth
$400 million loan tranche, part of a $5 billion loan pledged to
the current administration by the IMF early last year, due to
signs that the government's commitment to key economic reforms
were wavering, including delays in the sale of government-owned
shares in the publicly-listed Bank Central Asia (BCA) and Bank
Niaga.

The IMF had also expressed concern over implementation of the
new fiscal decentralization policy and the government-proposed
bill for amendment of the central bank law, accused of
jeopardizing the independence of Bank Indonesia.

The government is now determined to complete the divestment of
its shares in BCA and Bank Niaga during the first semester of
this year.

The government has also issued a decree temporarily banning
provincial and district administrations from taking out loans.

The independent panel of domestic and international experts,
jointly set up by the IMF and the government to review the
proposed bill amending the central bank law, also recently
completed its work.

Delay in disbursement of the IMF loan tranche has partly
contributed to a sharp drop in the rupiah's exchange rate against
the U.S. dollar, which dived to a 30-month low of around Rp
11,500 per U.S. dollar last month.

Bank Indonesia Governor Sjahril Sabirin said last week that
the IMF visit would help create positive sentiment for the ailing
rupiah.

The local currency strengthened to around Rp 10,638 per dollar
late on Tuesday, compared to Rp 10,820 the day before, ahead of
the IMF visit.

Meanwhile, Coordinating Minister for the Economy Rizal Ramli
said on Tuesday that the IMF mission's length of stay here had
not been decided.

Normally, the mission would stay for about two weeks to review
implementation of the country's economic reform program and to
assist the government draft a new letter of intent (LoI), which
stipulates economic and reform targets.

The mission would then return to Washington to present the
results of its review work here to the IMF board before the
latter approves the loan disbursement.

Rizal said that talks with the IMF mission would first focus
on reviewing the implementation of various economic reform
programs agreed with them last year.

He said that they would then discuss the country's current
economic situation.

Finally, the group would decide on programs to be implemented
in the future, he added.

Rizal said that the government had undertaken implementation
of the various programs outlined under the last LoI, signed with
the IMF in September.

He said that amendment of the central bank law was not part of
the LoI.(rei/03)