Indonesia's top economics minister left yesterday for crucial talks with the International Monetary Fund, after an advisory panel warned that the country's fragile economy would not recover unless key reforms were made.

In a statement obtained on Tuesday, the team of four dignitaries hand-picked by President Abdurrahman Wahid urged the Government to stick to its agreements with the IMF, saying Indonesia risked losing financial aid and a decline in economic confidence if it did not do so.

The IMF has propped up Indonesia's economy since the Asian financial crisis hit in 1997. But it recently suspended disbursement of $A770 million of loans because of disputes with the Government about the pace of economic reforms, which have stalled since last year.

The IMF has said that before new loans can be released Indonesia must deliver on three key issues. These are the maintenance of central bank independence, the need for oversight of a bank restructuring body and a ban on borrowing by regional governments.

In an effort to overcome the impasse, the Economy Minister, Mr Rizal Ramli – who last week accused the IMF of pushing too hard for reforms that involve tough political decisions – left for Washington on Tuesday for talks with fund officials.

"I look forward to discussing some of Indonesia's economic achievements and our continued commitment to the implementation of the economic rebuilding program," Mr Ramli said. "We hope the international community will not overlook ... the substantial progress we have made to date in meeting [IMF] program targets."

The presidential advisory panel, which met Mr Wahid on Saturday, consists of a former US Federal Reserve chairman, Mr Paul Volcker, Singapore's Senior Minister, Mr Lee Kuan Yew, a former senior Japanese diplomat, Mr Nobuo Matsunaga, and a former member of Germany's central bank, Mr Ulrich Cartellieri.

Indonesia "must build on a year of promising but still highly fragile and incomplete economic recovery", the four said in a statement. "That effort would be surely jeopardised – indeed made fruitless – by failure to address certain issues, some chronic, some new."

It said the Government must push through key reforms to the justice system. "We are told that economic progress and reform are being impeded by a sense of pervasive cronyism and corruption," the statement said.

The team's pessimistic outlook comes at a bad time for Mr Wahid, whose opponents are trying to oust him. However, he said yesterday that Indonesia's political crisis had passed and that his government faced "no serious threat".