[stop-imf] Indonesia Wins IMF Backing For Paris Club Restructuring (fwd)

[Robert Weissman]

Dow Jones Newswires
April 10, 2000

Indonesia Wins IMF Backing For Paris Club Restructuring

JAKARTA -- Indonesia should find it easier to restructure $2.1 billion in
sovereign debt owed to donor countries at the Paris Club meeting on April
12
after catching up on its economic reform program, the International
Monetary
Fund said Monday.

"I think the Fund will be supporting the request" to reschedule the debt,
said John Dodsworth, IMF country representative to Indonesia.

Indonesia has recently made good progress on bank recapitalization and
private debt restructuring that should pave the way for the IMF to send a
review team in the second half of April, Dodsworth told Dow Jones Newswires
in a telephone interview.

The government is struggling to implement a slew of economic reforms after
missing the IMF's original March 31 deadline.

Missing the target date caused the IMF to delay disbursing $400 million in
loans, triggering a slide in the Indonesian rupiah amid concerns over
President Abdurrahman Wahid's ability to push through reforms agreed in a
Letter of Intent signed on January 20.

"There will be discussion in Paris as to the timing of the review,"
Dodsworth
said.

The delayed loan disbursement cast a shadow over this week's Paris Club
meeting as some donor countries were reluctant to allow Indonesia to
reschedule its sovereign debt unless it remained on track with the IMF
program.

However, Dodsworth said the Indonesian government had started to make
headway
in meeting its deadlines, including recapitalizing PT Bank Negara Indonesia
over the weekend and beefing up the Jakarta Initiative, an agency tasked
with
facilitating negotations between private debtors and creditors.

"We've seen some step-up in implementation of reforms in the last few
weeks,
and are very encouraged by that," he said.

But pressed on the government's claim to be back on track with its reform
program, Dodsworth added that "I wouldn't say they've caught up."

Wahid's cabinet secretary, Marsilam Simanjuntak said over the weekend that
an
IMF review team would begin work on April 21 and conclude a week later, but
Dodsworth declined to comment further on the review timing.

On Friday, the Indonesian Bank Restructuring Agency said it had implemented
nine out of the 14 programs Jakarta had agreed to with the IMF earlier this
year. New deadlines have been reached for the other five measures.

It has also registered the initial public offering plan of PT Bank Central
Asia with Indonesian regulators. BCA was formerly Indonesia's largest
privately owned bank before it was nationalized in 1998.

IBRA plans to sell up to 30% of BCA to the public between May 16 and May 19
and hopes to raise around IDR1.4 trillion ($1=IDR7,660) from the IPO.

However, Wahid's government has been slow to tackle deep-rooted problems in
the judicial system to the detriment of high-profile legal cases including
the takeover of Bank Bali, which was recently annulled by a Jakarta court.

It also backpedalled on a plan to lift fuel subsidies April 1 after
political
opposition and threats of mass protests against the measure. The government
has still not said when it will cut subsidies, but admits that delaying by
more than three months would undermine its budget provisions.

The International Monetary Fund says Indonesia doesn't urgently need the
$400
million loan as it can easily meet its balance-of-payment requirements.

-By Simon Montlake; 62 21 3983 1277; smontlake@ap.org