Jakarta – Indonesia faces a race against time to fulfil pledges made to the International Monetary Fund if it is to persuade creditors to reschedule its debt and the IMF to release its next loan instalment, officials said yesterday.
Speaking ahead of a special Cabinet meeting to discuss speeding up economic reform, chief economics minister Kwik Kian Gie said the next disbursement of IMF bail-out funds was not likely to be made as scheduled, as several promised measures were yet to be completed.
The routine review by the IMF will lead to the disbursement of US$400 million in aid, but the review should have been completed by the end of last month, or early this month.
Mr Kwik said his office would continue to monitor their implementation and added that Indonesia had promised to implement key measures by April 12 and other reforms by April 30.
But a letter from IMF senior resident representative John Dodsworth obtained by Reuters said Indonesia should aim to further accelerate reforms to smooth its planned meeting with the Paris Club of creditors on April 12, when it will ask for the rescheduling of US$2.1 billion in debt.
"In order for the authorities to be able to present a stronger case to the Paris Club on April 12, it would be better if the measures dated April 12 could be advanced to April 8," said the March 31 letter which Mr Dodsworth sent to Mr Kwik.
The measures the IMF wants by April 8 include giving the Jakarta Initiative Task Force – set up to promote corporate debt restructuring – new powers to help it break the country's private debt deadlock and clamp down on recalcitrant debtors.
It also wants the recapitalisation of Bank Negara Indonesia (BNI) to begin, and the recapitalisation of Bank Mandiri to be completed. Performance contracts must also be signed with the two banks.
Indonesia's budget for fiscal 2000 assumes that the Paris Club will agree to reschedule US$2.1 billion, and failure to secure this could gravely hit the country's fiscal position.
Indonesia is due to receive a US$400 million IMF loan tranche early this month, but the body said last week that payment was not expected until next month amid concerns about the slow economic reform. The IMF is particularly concerned at Indonesia's failure to implement promised measures to tackle its US$65 billion private debt burden and take recalcitrant debtors to court.
In its letter, the IMF said that to minimise the delay in its next disbursement, a review team should aim to arrive in Jakarta during the last week of this month. "To ensure this, measures dated end-April would be better advanced to April 21," it said, adding that Indonesia must also clarify as soon as possible when it would fulfil other pledges for which no target date has been agreed.