U.S. greets IMF-RI pact with $1b trade finance

U.S. greets IMF-RI pact with $1b trade finance

WASHINGTON (Reuters): The United States on Friday welcomed Indonesia's agreement with the International Monetary Fund (IMF), offering US$1 billion in trade finance as an incentive for President Soeharto to stick to reforms.

"I welcome the agreement between the government of Indonesia and the International Monetary Fund on a revised Letter of Intent," U.S. Treasury Secretary Robert Rubin said in a statement.

"The key to its success is the Indonesian government's implementation now and over the long term," Rubin added.

Citing the IMF agreement, the U.S. Export-Import Bank said it was willing to provide up to $1 billion in short-term financing to Jakarta. The short-term financing would help U.S. exporters do business in Indonesia and help Indonesian firms buy U.S. goods.

The memorandum on economic reforms was Indonesia's third such agreement with the IMF in less than six months. The 117-point reform program, agreed after more than three weeks of talks with the IMF, will overhaul the way business is done in Indonesia if fully implemented.

Hoping to convince skeptics this will be done, the government set target dates for implementing all key points. It promised a new antimonopoly law by the end of the year, moves to set up a bankruptcy law and a special bankruptcy court by April 22 and regulations for winding up of companies, mergers and acquisitions by the end of September.

"This agreement supports a comprehensive program designed to restore financial stability and growth in Indonesia," Rubin said. "The United States and the international community have a major stake in seeing Indonesia succeed in its efforts."

Earlier on Friday, Rubin urged Jakarta to follow the examples set by South Korea and Thailand, the other countries hard-hit by the financial crisis.

"Korea and Thailand really have taken hold of reform and made it their own," Rubin told reporters after meeting with Philippines President Fidel Ramos in Washington.

"And while they obviously have enormous challenges to deal with going forward, they really have made these programs their own and that is what hopefully Indonesia will do," he said.

There have been doubts about Indonesia's commitment to reforms since it dithered on the previous two agreements, signed in exchange for a $40 billion IMF-led bailout. The IMF delayed a $3 billion payment last month because it was worried about the way Indonesia was implementing the reforms.

After meeting with Ramos, Rubin said Indonesia's compliance with the IMF program was not only important for Jakarta but for the other countries in the region.

The Export-Import Bank, an independent U.S. government agency, said it was "encouraged" by Indonesia's progress in addressing the country's financing and banking problems.

Along with $1 billion in financing, Ex-Im Bank Chairman James Harmon offered advice to Indonesian President Soeharto.

"I believe that the implementation of IMF reforms is essential for Indonesia in its recovery program for the benefit of its local economy," Harmon said in a statement.

"Ex-Im Bank has remained open to consider credit-worthy business in Indonesia, and with proper structuring, is willing to significantly increase short-term financing to provide a bridge to long-term economic growth for U.S. exporters and the Indonesian economy," he added.