Rizal upbeat IMF, govt will reach deal

JAKARTA (JP): Coordinating Minister for the Economy Rizal Ramli said on Tuesday he was confident the government would be able to reach an agreement with the International Monetary Fund soon.

"I'm confident that our government and the IMF will reach an agreement soon," Rizal said in a press statement.

"I am visiting Washington D.C. to further discuss our government's position on the amendments to the central bank law, and the remaining measures concerning (fiscal) decentralization and corporate restructuring," he added.

Rizal left Jakarta late on Monday for Washington to meet IMF first deputy managing director Stanley Fischer and U.S. Treasury Secretary Paul O'Neill.

Government relations with the IMF have been strained by a delay in the disbursement of the Fund's third loan tranche of US$400 million late last year.

The Fund made the delay after the government failed to implement its promise to sell ownership in Bank Central Asia and Bank Niaga in December, and to address concerns over the new fiscal decentralization policy and proposed amendments to the central bank law.

The IMF promised the current administration some $5 billion in bailout loans in January last year. It has so far disbursed around $1 billion. The disbursement of the Fund's money is seen as a key factor to help maintain investors confidence in the ailing economy.

There have also been worries that the Paris Club of creditor nations would cancel the restructuring of some $2.8 billion of Indonesian official debts maturing this year if the IMF continued to delay its loan to Indonesia.

Last week Rizal complained that the IMF had been pressing too hard, saying it was difficult to implement every reform while the country was going through its complex transition to democracy.

The IMF has expressed concern over the government proposed amendment of the central bank law, saying it could undermine the independence of Bank Indonesia.

Critics have said that the planned amendment was merely designed to accommodate the wish of President Abdurrahman Wahid to dismiss Bank Indonesia Governor Sjahril Sabirin and his deputies.

But Rizal has often said that the amendment was needed to boost the accountability of Bank Indonesia amid alleged rampant corruption at the central bank in the past.

The IMF has also demanded the government issue a special ruling prohibiting provincial and district administrations from borrowing both overseas and domestically to prevent a borrowing spree following the implementation of the new fiscal decentralization policy.

But Rizal has said that the government couldn't totally ban regions from borrowing because the law allows them to make debts under strict conditions to help finance their greater powers of autonomy.

Rizal left for Washington only two days after Abdurrahman's four foreign advisers, who met with the President over the weekend, urged the government to mend its ties with the IMF and to stick to the reform agenda already agreed with the multilateral agency.

"We believe Indonesia is poised at a critical juncture. It must build on a year of promising, yet still highly fragile and incomplete, economic recovery," the advisers said in a memo to Abdurrahman which was released on Tuesday.

"That effort would be surely jeopardized -- indeed made fruitless -- by failure to address certain issues, some chronic, some new," they added.

The advisers also recommended a withdrawal of the planned amendment of the central bank law.

"We would recommend that you allow a period of review and reconsideration, including withdrawal of present legislation," they said.

One of the controversial points in the amendment of the central bank law is the possibility of senior politicians being appointed as members of Bank Indonesia's board of governors.

The proposed bill is currently being debated by the House of Representatives special team.

Separately, some legislators said on Tuesday that the government should reconsider withdrawing the planned amendment of the central bank law due to current unfavorable development.

"Our faction thinks that the amendment is not a very urgent matter," said legislator Faisal Baasir of the United Development Party.

He pointed out that the government should instead focus now on efforts to recover the ailing economy, particularly bank and corporate restructuring programs.

Paskah Suzetta, spokesman of the Golkar Party, said that he would also approve if the government decided to stop the amendment process.

But legislator Rizal Djalil of the Reform Faction warned that the government would be "politically humiliated" if it withdrew itself from the initial commitment to amend the central bank law.

"I demand the IMF to stay out. They must not interfere," he said. (rei)