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IMF pleased by Indonesian reforms, warns against backsliding |
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April 25, 2000 JAKARTA, APR 24 (AP) - The International Monetary Fund's acting director said Monday he was encouraged by Indonesia's economic reform but warned that the government must not waver from the reform program demanded by the fund.
Speaking after meeting President Abdurrahman Wahid, Stanley Fischer said he expects the flagging national currency to strengthen if reforms are put in place.
"I believe the President will renew his efforts to implement the program," the fund's most senior official told reporters at the state palace.
Indonesia has been under pressure to meet a host a reform deadlines before the IMF will release a dlrs 400 million loan.
The IMF postponed the disbursement of the loan tranche because Wahid's government slipped back in its timetable for change.
An IMF review team this week is scheduled to assess Indonesia's reform record before the fund's board meets in May to decide whether to resume lending to Indonesia.
"The main reason for my visit is to reassure President Wahid of the IMF's support for Indonesia's economic program and to review its progress with him," Fischer said in a statement Sunday.
He also welcomed this month's Paris Club of creditors agreement to reschedule dlrs 5.8 billion of Indonesia's debt.
Senior Economics Minister Kwik Kian Gie last week said he was optimistic that the IMF would resume lending to Indonesia in May.
The minister also said that, as of last Wednesday, the government had implemented 90 percent of the programs stipulated in the letter of intent with the IMF.
The national currency has weakened progressively over the past few weeks, hitting a low of 8,000 rupiah to the dollar last week, well off its levels of around 6,875 at the beginning of the year.
Fischer reiterated the IMF's view that the main challenges for Indonesia remain bank and corporate debt restructuring and fiscal decentralization. The fund has long accused the government of dragging its feet on these core aspects of its economic program.
Fischer said he had discussed with Wahid's economic team the government's request to change the status of its next loan installment to a standby loan, that it would only draw down as needed.
Currently, the government has to accept IMF loans when released by the fund. "It's too premature to say whether we can change the status of the loan," Fischer said. "It is a possibility, but there are certain factors that must be taken into account."
Speaking to reporters after the same meeting, Kwik said the IMF had explained that Indonesia must reach certain benchmarks before the status of the loan can be altered.
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