Joanne Collins, Jakarta – The IMF on Wednesday urged Indonesia's new economic team to forge ahead with the revised 2001 budget, saying it was an important precursor to mending frayed relations.
The Fund stalled its $5 billion loan programme to Indonesia last year over a raft of missed economic reforms. Fresh funds now mainly hinge on a revised budget and central bank law reforms.
"Pushing [former Finance Minister] Prijadi's plan through [on the revised budget] is an important aspect of the agreement with the Fund," IMF senior resident representative in Jakarta, John Dodsworth, told Reuters. "We are very happy with the government's proposal to parliament for the budget so we hope that within the new team, that proposal will be carried through quickly," he added.
Indonesia's parliament is expected to approve key changes to the 2001 state budget on Wednesday, ahead of the original June 15 schedule.
The new timetable was agreed to before Wahid announced the reshuffle. Analysts on Tuesday branded President Wahid's latest cabinet reshuffle as pointless given looming impeachment hearings against him. The People's Consultative Assembly (MPR) will meet on August 1 to consider impeaching the Muslim cleric over his chaotic 20-month rule and two financial scandals.
Under the cabinet shakeup, little-known central bank deputy governor Burhanuddin Abdullah was appointed chief economics minister, replacing outspoken Rizal Ramli. Ramli, who has been accusing the Fund of blackmailing Indonesia over central bank law reforms, replaced Finance Minister Prijadi Praptosuhardjo. Abdullah, who served as the central bank's representative to the IMF in Washington in the early 1990s, vowed on Tuesday to restore relations with the Fund.
But Dodsworth said the make up of the new team was not so important as accelerating reforms. "We are keen to work with the government whatever the composition of the economic team so we do want to move quickly with the team to try and resolve the oustanding issues," Dodsworth said.
Indonesia said on Tuesday the Fund would send a team to conduct a review of the country's economic reforms as soon as the budget revisions were passed.
The government has been under mounting pressure to adjust the budget amid a crumbling rupiah and climbing interest rates which are crippling debt servicing efforts. The IMF recently warned Indonesia its budget deficit would mushroom to six percent of gross domestic product (GDP) unless urgent measures were taken.
The revised budget assumptions include: economic growth of 3.5 percent from five percent, inflation of 9.3 percent against the original 7.2 percent, an exchange rate of 9,600 rupiah per dollar from 7,800 and an average interest rate of 15 percent from 11.5 percent.