[stop-imf] Argentina, Indonesia updates

[Robert Weissman]

Excerpted from: World Bank Press Review: Headlines for Thursday, January
9, 2003

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IMF to Send Team to Discuss Argentina Aid
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The International Monetary Fund said on Wednesday it was sending a mission
immediately to Argentina to try to conclude negotiations on new aid for
the crisis-racked country, reports the Financial Times.

The talks will be aimed at agreeing a transitional program that is likely
to involve a temporary suspension in payments Argentina owes the IMF and
other lending agencies.

In a statement following a meeting on Wednesday of the executive board
reviewing Argentina, the IMF said it regretted the long delays in the
country's effort to put together a sustainable economic recovery plan. It
added that the fund's directors "recognized the greater economic and
financial stability seen during the second half of 2002" and that fiscal
restraint by the Argentine government had contributed to that improvement.

In Buenos Aires, a top official from the Economy Ministry said the
government had "positive hopes" about the mission, and said that an
agreement "could be closed" in the coming week, adds AFP.

Thomas Dawson, IMF external relations director, told a news conference in
Kong Kong that the IMF was focused on two key areas for an interim
agreement, adds FT.

"One is on the fiscal side to work out a program that would support a 2.5
percent primary surplus for 2003. This is the basic approach on the fiscal
area," he said.

"On the monetary side, we are looking at working with the authorities to
develop or get a sense of the measures needed to maintain and then, as
difficulties arise, preserve what we call the monetary anchors in order to
be able to capitalize on what has been an improved fiscal and inflation
performance over the last year or so."

On January 17, the IMF board will announce whether it will confirm an
agreement to allow Argentina to reprogram its obligations with the
multilateral money lending organizations through August 2003, for some
nine billion dollars, notes AFP.



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As Protests Rise, Indonesia Weighs Exiting IMF Loan
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Indonesia said on Thursday it would consider allowing a $5 billion loan
program with the International Monetary Fund to lapse when it expires
later this year as protests mounted over the cutting back of subsidies,
reports Reuters. Mahendra Siregar, a senior adviser to Indonesia's chief
economics minister said a team of senior officials would be set up to
consider the implications of not renewing the loan.

The IMF program prescribes tough fiscal austerity measures and critics say
it hurts millions of the country's poor. But jettisoning it could hit the
state budget as it would then be harder for Jakarta to reschedule its huge
$70 billion public foreign debt.

Students and workers clashed with police outside the presidential palace
in Jakarta on Thursday in the first violence in four days of protests
against increases in fuel and electricity prices, a bid to cut budget
subsidies as part of the IMF-led economic reforms.

In 1998, widespread riots over price rises, which also came after
IMF-prescribed austerity measures, were one of the key factors that led to
the resignation of Indonesian strongman Suharto.

"The team will study the impacts of not extending the IMF programme, what
should be done to help ensure economic stability after it expires late
this year," said Siregar.