Indonesia Reaches New Agreement In Principle With IMF- Min (fwd)

[Robert Weissman <rob@essential.org>]

November 12, 1998
Indonesia Reaches New Agreement In Principle With IMF- Min
Dow Jones Newswires

JAKARTA -- Indonesia has reached agreement in principle with the
International
Monetary Fund on a new letter of intent which should pave the way for the
release of another $1 billion of the fund's loan for the country, senior
economics minister, Ginandjar Kartasasmita, said Thursday.
Speaking to reporters after meeting President B.J. Habibie, Ginandjar also
said that this was the IMF's last monthly review of its assistance program
for
Indonesia.
The fund began conducting monthly reviews after the country's major
upheaval
in May, which culminated in the ouster of former President Suharto and his
replacement by B.J Habibie. The IMF usually carries out quarterly reviews
of
its assistance programs.
Ginandjar said that for the next six months, the IMF will conduct program
reviews every two months, and will move to quarterly reviews after that.
Finding an effective way to monitor its Indonesia program has been a key
concern of the IMF, even before the upheaval in May. The fund was
repeatedly
frustrated by Suharto's breaching of program commitments while he was in
office.
Ginandjar said the government would announce the formal details of its new
IMF
agreement on Friday.
The government signs a new letter of intent with the IMF after every
program
review.
"In principle, we (Ginandjar and Hubert Neiss) have reached an agreement on
the November review which will be announced tomorrow," Ginandjar said.
IMF Asia Pacific Director Hubert Neiss is in Jakarta this week to wind up
the
program review.
   Ginandjar said the week's discussions with the IMF focused on bank
restructuring, easing monetary policy, controlling inflation and boosting
the
value of the rupiah.

Neiss said earlier this week that the program review would reassess the
country's macroeconomic figures.
"The review was positive," Ginandjar said.
Ginandjar, the main figure in Indonesia's contacts with the IMF, leaves
Friday
for Kuala Lumpur for the meeting of trade ministers of the Asia Pacific
Economic Cooperation forum, meaning the review had to be wound up by then.
Overall, the IMF has pledged to assist Indonesia with about $11.3 billion
to
help it overcome its financial crisis, as long as Indonesia continues to
make
progress on economic and structural reforms. The IMF has about $3.3 billion
left of the total to disburse.
According to the schedule released by the fund in August, the next loan
tranche is due for disbursement on Nov. 25. It will total 684.3 million
special drawing rights (SDRs) or roughly $1 billion.
SDRs are made up of a basket of the world's currencies.
   -By Grainne McCarthy; 6221 350 01 45; gmccarthy@ap.org