RI signs last IMF letter of intent for $400m loan

RI signs last IMF letter of intent for $400m loan

Agence France-Presse, Jakarta

The government of Indonesia on Wednesday signed its last "letter of intent" with the International Monetary Fund on economic reforms, paving the way for a final US$400 million loan installment before it quits the program at year-end.

The signing follows completion of the 11th review of the reform program by an IMF team.

The letter was signed by Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti and Bank Indonesia Governor Burhanuddin Abdullah.

Minister of Finance Boediono said the IMF executive board was expected to meet on Dec. 19 to approve the letter and the outcome of the review, and to release the funds a few days afterwards.

"The focus of the review is still on bank restructuring, privatization, fiscal discipline and monetary stability," Dorodjatun told reporters.

Indonesia will be the last of the countries hit by the 1997/98 regional financial crisis to exit the IMF's tutelage. It will have borrowed a total of five billion dollars over four years.

The country will enter an IMF post-monitoring program, which means that it will start repaying debt within the normal schedule of seven years as agreed.

The final loan disbursement will increase its total outstanding debt to the IMF to around $9.8 billion.

The government has formulated its own economic strategy known as the White Paper, aimed partly at achieving a balanced budget in 2005-2006.

Last month the IMF said the program had been largely successful in helping restore macroeconomic stability.

But it said further efforts to strengthen state banks were essential following a loan scandal at Bank Negara Indonesia which has now spread to a second state bank.