Rizal makes little progress in lobbying IMF

Rizal makes little progress in lobbying IMF

JAKARTA (JP): High-level talks between the government and the
International Monetary Fund in Washington on Wednesday failed to
produce enough progress to break the deadlock that has frozen
crucial IMF lending to Indonesia.

Coordinating Minister for the Economy Rizal Ramli met with the
IMF first deputy managing director Stanley Fischer, hoping to
make sufficient progress on key issues such as the amendment of
the central bank law and the fiscal decentralization policy so as
to reach an agreement which could lead to the disbursement of the
Fund's next US$400 million loan tranche.

But Reuters said that a brief statement from the IMF late on
Wednesday appeared to signal that little progress, if any, was
made at the talks and another source familiar with the situation
indicated the stalemate was still continuing.

"I can confirm that Stanley Fischer met with Minister Ramli
this afternoon," was the only light IMF spokesman Vasuki Shastry
would shed on the talks.

He also said that no further talks had been scheduled as yet
between the IMF and the Indonesian authorities.

Rizal also held talks on Wednesday with U.S. Treasury
Secretary Paul O'Neill. But the Treasury Department did not issue
any statement on the substance of the talks.

The IMF delayed the disbursement of its latest loan tranche in
December last year due to concerns over the government-proposed
bill on the amendment of the central bank law, the new fiscal
decentralization policy and delays in the sale of the
government's stakes in Bank Central Asia (BCA) and Bank Niaga.

The most difficult issue seems to be the amendment of the
central bank law, which some say could threaten the independence
of Bank Indonesia.

The IMF has said it will only disburse its next loan
installment after the amendment of the central bank law has been
completed in such a way as to not affect the independence of the
central bank.

Separately, Minister of Finance Prijadi Praptosuhardjo said on
Thursday that the government would try to lobby the IMF so that
the multilateral agency would not link the disbursement of its
loan installment to the amendment process.

Prijadi said that the government did not want to hasten the
deliberation process of such an important bill in the House of
Representatives.

"We expect to reach an understanding with the IMF, and now the
Coordinating Minister for the Economy is in Washington (to
lobby)," he told reporters following a plenary session of the
House.

Prijadi also said that the government had basically fulfilled
most of the economic reform pledges contained in the so-called
Letter of Intent to the IMF.

"The only part which has not been completed is the sale of
Bank BCA and Bank Niaga as this still needs the approval of the
House," he said.

The government was supposed to complete the sale of the two
banks in December, but this was delayed due to unfavorable market
conditions at the time. The government is now planning to
complete the divestment program in June, but it must first be
approved by the House.

Meanwhile, Speaker of the House of Representatives Akbar
Tandjung urged the government to reach an accommodation with the
IMF to allow for the disbursement of the Fund's loan so as to
support the ailing economy.

"The support of the IMF is very important for influencing
those who may be planning to invest here," he told reporters.

The IMF has promised the current administration some $5
billion in bailout loans for three years starting in January,
2000. So far, it has disbursed around $1 billion.

There has been concern that if the government fails to reach
an agreement with the IMF by the end of March, the Paris Club of
creditor nations could also cancel the restructuring of the
country's sovereign debt. (rei)