Neiss: Indonesia Doesn't Need IMF Funds Right Now (fwd)

[Robert Weissman <rob@essential.org>]

Dow Jones Newswires
November 1, 1999
Neiss: Indonesia Doesn't Need IMF Funds Right Now
JAKARTA -- Indonesia isn't in urgent need of International Monetary Fund
money now, but will need international support over the medium term, IMF
Asia
Pacific director Hubert Neiss said Monday.
Speaking to reporters upon arriving at Jakarta airport, Neiss said his
visit
to the Indonesian capital this week won't lead to the immediate resumption
of
IMF loans, which have been suspended over a damaging corruption scandal
linked to Bank Bali.
He said such a resumption would follow the publishing of an international
audit of the Bank Bali scandal, as well as a thorough review by the IMF of
the Indonesian economic program, which can't take place until the former
happens.
"Indonesia doesn't need IMF money right now, but needs international
support
over the medium term," Neiss said.
The IMF suspended loans to Indonesia earlier this year after it leaked out
that around $80 million had been transferred out of the nationalized Bank
Bali to a company linked to the ruling Golkar party.
The money came from an overall transfer of around $120 million to Bank Bali
from the central bank that was authorized under a government guarantee
scheme.
The IMF has insisted that the audit report of the affair be published, that
the perpetrators are pursued through the appropriate legal channels and
that
mechanisms are put in place to ensure such a scandal can't happen again.
Neiss reiterated this point Monday, noting that publishing the report
wouldn't in itself be sufficient to switch loans on again saying the
appropriate legal measures need to be taken against any wrongdoers that
helped orchestrate the transfer.
"Once the report is published, necessary follow up actions (must be) taken,
like introducing better procedures and if there's any wrongdoing, there is
a
legal process," to pursue those wrongdoers, he said.
Neiss said the initiation of this legal process would be sufficient,
admitting that investigations through the court or other legal channels
could
drag on. He said "we don't have to wait until everything is completed," to
switch funding on again.
The purpose of Neiss' trip is to meet the new government of President
Abdurrahman Wahid and get a preliminary sense of Indonesia's macroeconomic
outlook. He said a full negotiating team needs to come to Jakarta to review
the economic program and then Indonesia would have to sign a new letter of
intent with the IMF before funding could resume.
"Before we restart lending, we have to agree on a letter of intent and that
will be done by a team," Neiss said. That could happen "pretty soon," he
said.
Clearing up the Bank Bali affair is a prerequisite to any of that
happening,
Neiss added.
Neiss said the IMF would have to update the country's macroeconomic outlook
in the light of the dramatic change in Indonesia's political situation.
The new Indonesian government has said it would seek a major review of the
$43 billion IMF-led economic program and could seek changes to its terms.
-By Simon Montlake; 62 21 3983 1277; smontlake@ap.org