[stop-imf] Top Indonesia panel recommends no extension to IMF deal

Robert Weissman rob@essential.org
Fri, 09 Aug 2002 16:47:41 -0700 

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Top Indonesia panel recommends no extension to IMF deal

JAKARTA, Aug.9  (Reuters) - A commission from Indonesia's top
legislative
body, the People's Consultative Assembly (MPR), recommended on Friday
the
government not extend the current $5 billion assistance loan from the
International Monetary Fund.

No reason was given for the recommendation, which is not binding, but
critics
of the IMF agreement have said it was doing more harm than good for the
world's fourth most populous country.

The commission's recommendation, effectively rejects a government
proposal to
extend IMF assistance beyond the present programme which runs out at the
end
of 2003, and if implemented would have a significant long-term impact on
the
economy.

"In relation to (Indonesia's) agreement with the IMF which will run out
by
end-2003, (the MPR) asks the government not to extend (the agreement)
and to
prepare a thorough exit plan so that it will not lead to monetary
instability," the commission said in a written recommendation to the
annual
sitting of the MPR.

Although the government does not have to follow this recommendation,
which is
expected to be approved at the MPR's final sitting on Saturday, analysts
say
not doing so would create major political problems for President
Megawati
Sukarnoputri with lawmakers.

The 10-day MPR session has been running since August 1.

The recommendation comes during the final days of a high-level IMF
mission to
Indonesia checking Jakarta's progress on a batch of economic reforms.

The mission is expected to pave the way for the release of a fresh $358
million loan under the $5 billion programme.

Without an IMF programme, Indonesia would not be eligible for vital debt

rescheduling from the Paris Club of official creditors which in April
agreed
to roll over some $5.4 billion of sovereign debt.

"The government is likely to be in need of more sovereign debt
restructuring
in the future to help ease its debt burden," said Citibank economist
Anton
Gunawan.

Indonesia, the hardest hit by the Asian financial crisis of the late
1990s,
has a total foreign debt of around $130 billion.

Mahendra Siregar, a senior economics ministry official, said the
government
was taking steps to prepare for the IMF's departure at some point in the

future but would not be drawn on the MPR recommendation.

"This is a decision by a major political institution, the MPR, and the
government will take note," Siregar said.

Last week President Megawati Sukarnoputri, in her first progress report
to
the MPR, stressed the importance of IMF-led reforms and chief economics
minister Dorodjatun Kuntjoro-Jakti said the government wanted assistance
from
the Fund to continue after the current programme expires.

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<font face="Monospace,Courier">Top Indonesia panel recommends no extension
to IMF deal</font>
<p><font face="Monospace,Courier">JAKARTA, Aug.9&nbsp; (Reuters) - A commission
from Indonesia's top legislative</font>
<br><font face="Monospace,Courier">body, the People's Consultative Assembly
(MPR), recommended on Friday the</font>
<br><font face="Monospace,Courier">government not extend the current $5
billion assistance loan from the</font>
<br><font face="Monospace,Courier">International Monetary Fund.</font>
<p><font face="Monospace,Courier">No reason was given for the recommendation,
which is not binding, but critics</font>
<br><font face="Monospace,Courier">of the IMF agreement have said it was
doing more harm than good for the</font>
<br><font face="Monospace,Courier">world's fourth most populous country.</font>
<p><font face="Monospace,Courier">The commission's recommendation, effectively
rejects a government proposal to</font>
<br><font face="Monospace,Courier">extend IMF assistance beyond the present
programme which runs out at the end</font>
<br><font face="Monospace,Courier">of 2003, and if implemented would have
a significant long-term impact on the</font>
<br><font face="Monospace,Courier">economy.</font>
<p><font face="Monospace,Courier">"In relation to (Indonesia's) agreement
with the IMF which will run out by</font>
<br><font face="Monospace,Courier">end-2003, (the MPR) asks the government
not to extend (the agreement) and to</font>
<br><font face="Monospace,Courier">prepare a thorough exit plan so that
it will not lead to monetary</font>
<br><font face="Monospace,Courier">instability," the commission said in
a written recommendation to the annual</font>
<br><font face="Monospace,Courier">sitting of the MPR.</font>
<p><font face="Monospace,Courier">Although the government does not have
to follow this recommendation, which is</font>
<br><font face="Monospace,Courier">expected to be approved at the MPR's
final sitting on Saturday, analysts say</font>
<br><font face="Monospace,Courier">not doing so would create major political
problems for President Megawati</font>
<br><font face="Monospace,Courier">Sukarnoputri with lawmakers.</font>
<p><font face="Monospace,Courier">The 10-day MPR session has been running
since August 1.</font>
<p><font face="Monospace,Courier">The recommendation comes during the final
days of a high-level IMF mission to</font>
<br><font face="Monospace,Courier">Indonesia checking Jakarta's progress
on a batch of economic reforms.</font>
<p><font face="Monospace,Courier">The mission is expected to pave the way
for the release of a fresh $358</font>
<br><font face="Monospace,Courier">million loan under the $5 billion programme.</font>
<p><font face="Monospace,Courier">Without an IMF programme, Indonesia would
not be eligible for vital debt</font>
<br><font face="Monospace,Courier">rescheduling from the Paris Club of
official creditors which in April agreed</font>
<br><font face="Monospace,Courier">to roll over some $5.4 billion of sovereign
debt.</font>
<p><font face="Monospace,Courier">"The government is likely to be in need
of more sovereign debt restructuring</font>
<br><font face="Monospace,Courier">in the future to help ease its debt
burden," said Citibank economist Anton</font>
<br><font face="Monospace,Courier">Gunawan.</font>
<p><font face="Monospace,Courier">Indonesia, the hardest hit by the Asian
financial crisis of the late 1990s,</font>
<br><font face="Monospace,Courier">has a total foreign debt of around $130
billion.</font>
<p><font face="Monospace,Courier">Mahendra Siregar, a senior economics
ministry official, said the government</font>
<br><font face="Monospace,Courier">was taking steps to prepare for the
IMF's departure at some point in the</font>
<br><font face="Monospace,Courier">future but would not be drawn on the
MPR recommendation.</font>
<p><font face="Monospace,Courier">"This is a decision by a major political
institution, the MPR, and the</font>
<br><font face="Monospace,Courier">government will take note," Siregar
said.</font>
<p><font face="Monospace,Courier">Last week President Megawati Sukarnoputri,
in her first progress report to</font>
<br><font face="Monospace,Courier">the MPR, stressed the importance of
IMF-led reforms and chief economics</font>
<br><font face="Monospace,Courier">minister Dorodjatun Kuntjoro-Jakti said
the government wanted assistance from</font>
<br><font face="Monospace,Courier">the Fund to continue after the current
programme expires.</font>
<p><font face="Monospace,Courier">------------------------</font>
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